ITC Share: Understanding Its Financial Strengths and Fundamentals

Investors in India are always on the lookout for stable and high performing stocks and ITC share has been a favourite for many for years. Investing in the stock market can be rewarding and complex especially when it comes to biggies like ITC Limited. With a portfolio that spans FMCG, hotels, packaging, paperboards and agribusiness, ITC has established itself in the Indian market.  With a strong growth story, diverse business segments and a reputation for strong financials ITC continues to attract both institutional and retail investors. Understanding the financials that impact ITC’s share price is important for investors who want to make informed decisions. In this blog we will look into the key financials, historical performance and future outlook of ITC’s share price.

Introduction

ITC Limited is one of India’s most diversified conglomerates. Founded in 1910, it began as a cigarette and tobacco company but has since expanded into several sectors. Today ITC Limited is one of India’s largest private sector company operating in various segments like FMCG, hotels, paperboards and packaging, agri-business and information technology. With its diverse portfolio ITC’s stock is a favourite among investors looking for a balanced stock with growth.

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Market Cap and Valuation

In terms of market capitalization, ITC is the second-largest FMCG company in India and the third-largest tobacco company in the world. As of latest data ITC’s market cap is around ₹5.76 trillion making it one of the largest company in India by market value. Its products are available in 6 million retail outlets in India and exported to 90 countries.[1The valuation metrics are:

• P/E Ratio: 23.5x
• P/B Ratio: 5.1x

ITC Share Fundamentals:

ITC’s financials for FY 2024-25 shows the company’s ability to deliver consistent returns to its shareholders. The key numbers are:

• Revenue: ₹78,982 crore (up 7.1% y-o-y)
• Operating Profit (EBITDA): ₹17,312 crore (up 10.3% y-o-y)
• Net Profit: ₹13,421 crore (up 9.8% y-o-y)
• EPS: ₹10.89
• Market Cap: ₹ 5,76,310 Cr.
• 52 week High: 529
• 52 week Low:  399
• Stock P/E28.0
• Book Value₹ 60.2
• Dividend Yield2.99 %
• ROCE37.5 %
• ROE28.4 %
• Face Value₹ 1.00

Why Investors Trust ITC

1. Stable Dividend Yield

One of the best things about ITC share is the dividend yield. ITC is known to give good dividends to its shareholders, often above 2-5% per annum, so it’s a great choice for income investors.

2. Earnings Growth

ITC’s earnings have been growing steadily over the years. With FMCG and agriculture contributing well, it has weathered economic downturns better than many of its peers.

3. Debt-Free Balance Sheet

One of ITC’s biggest advantage is being debt free. This financial discipline allows ITC to invest in new ventures and expansions without much interest burden and keep its net profits healthy.

4. High Return on Equity (ROE)

ITC has consistently delivered high ROE, which means it’s able to generate profits efficiently. For investors, this is a clear indicator of the company’s operational efficiency.

5. Diversified Risk Profile

With presence in multiple sectors, ITC is less exposed to risks of economic slowdown or sector specific challenges. For instance, while its cigarette business faces regulatory challenges, its FMCG and agri-business segments have growth opportunities.

ITC Financial Performance: Recent Highlights

1. Revenue Growth

In fiscal 2023-24, ITC reported 12% YoY revenue growth led by FMCG and agri-business. Packaged foods like Aashirvaad and Sunfeast are household names and contribute significantly to topline.

2. Profit Margins

ITC’s net profit margins are one of the best in the industry, above 25%. Cigarette segment with high margins is still supporting overall profitability despite regulatory challenges.

3. FMCG Leadership

FMCG segment has grown in double digits in recent years and contributes over ₹20,000 crores to topline. ITC has launched new products in line with consumer preference for healthier and premium options.

4. Hotel Recovery

Post pandemic, ITC Hotels has seen strong recovery in occupancy and RevPAR. Though smaller, this segment adds a bit of luxury to ITC’s diversified portfolio.

5. Share Buyback Programs

ITC has occasionally done share buyback, which boosts investor confidence and indicates that company thinks its shares are undervalued at certain points.

6. Dividend Policy

ITC has a consistent dividend payout record and is a good stock for income investors. The company’s dividend policy is to distribute 80-85% of profits to shareholders. For FY 2023-24 ITC declared a dividend of ₹10.15 per share which is 2.9% dividend yield.

Segment-wise Performance

FMCG

FMCG segment which includes cigarettes and non-cigarettes is the largest contributor to ITC’s revenue. The segment reported revenue of ₹49,532 crore, 62.7% of the total revenue. Cigarette business is still a cash cow for ITC with stable margins and strong brand equity.

Hotels

ITC’s hotels segment reported revenue of ₹3,129 crore, a significant recovery from the previous year driven by the rebound in travel and tourism post pandemic. The company’s focus on expanding its luxury and premium hotel portfolio is starting to show results with higher occupancy and average room rate (ARR).

Agri-Business

Agri-business which includes export of agricultural commodities and sourcing of raw materials for ITC’s FMCG business reported revenue of ₹12,716 crore. Global demand for Indian agricultural products and commodity prices were favourable.

Paperboards, Paper, and Packaging

₹6,193 cr Demand for sustainable packaging solutions is growing. ITC is investing in capacity expansion and innovation in this segment to meet the demand from FMCG and e-commerce.

Information Technology

ITC Infotech ₹2,308 cr Digital transformation services and IT solutions across industries is driving demand.

Strategic Initiatives and Growth Drivers

ITC’s growth strategy is to expand in high growth areas and leverage its brand equity in the core cigarette business. Some of the key initiatives are:

• Diversification in FMCG: ITC is investing in non-cigarette FMCG portfolio which includes packaged foods, personal care and healthcare products. Target is to reach ₹1 lakh crore by 2030.
• Sustainability: ITC has been a pioneer in integrating sustainability into its business. ITC has set targets to be carbon positive, water positive and solid waste recycling positive. ITC’s focus on sustainability has also helped it tap into the growing demand for eco-friendly products.
• Digital: ITC is investing in digital to improve operational efficiency, customer engagement and innovation. Digital initiatives include adoption of advanced analytics, artificial intelligence and automation in various business processes.
• International Markets: ITC is looking to expand in international markets, particularly in FMCG and agri-business. Company will leverage its brand and product portfolio to capture market share in emerging economies.

Analysts View and Future Prospects

Analysts are positive on ITC’s stock price due to strong fundamentals, strategic initiatives and growth potential. Consensus target price is around ₹450 which is 10% up from current levels.

• Revenue Growth: 8-10% CAGR over 5 years driven by FMCG and Hotels growth
• Margin Expansion: Cost optimization and value added products will drive margin expansion
• Shareholder Returns: Dividends and capital appreciation for long term investors

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ITC Share Price History

ITC Limited has been a consistent performer in the Indian stock market with its stock price reflecting the company’s strong financials and strategic business initiatives. Over the last 5 years ITC’s stock price has been on an upward trajectory with strong earnings growth and diversification into new businesses. The stock price touched an all time high of ₹529 in 2024, a sign of investor confidence in ITC’s long term growth. Over the last 10 years ITC share price has been steadily up and down. Long term investors of ITC have benefited from:

• Capital Appreciation: ITC shares have doubled for long term investors in 8-10 years.
• Regular Dividends: Dividends have given steady passive income over the years.
• Defensive: ITC shares perform well even in market volatility due to its stable business.

How ITC Compares to Competitors

When evaluating the ITC share, it’s important to consider its position relative to peers like Hindustan Unilever (HUL) and Nestle India in the FMCG space.

While HUL and Nestle India command higher valuations, ITC provides a balanced mix of growth, income, and stability.

ITC Share Price in 2025

1. Regulatory Environment

Cigarette business is a double edged sword for ITC. While it is the most profitable segment, increasing regulations on tobacco will impact future growth. Recently government decided to increase the cigarette GST to 35% which inversely effected ITC.

2. FMCG Expansion

ITC is focusing on healthy and premium products in FMCG segment. Innovation and market penetration will be the key.

3. ESG Initiatives

ITC has gone green with initiatives like recyclable packaging and carbon neutrality. It’s a good option for ESG investors.

4. Digital Transformation

ITC is investing in digital tools for supply chain optimisation and consumer engagement to improve operational efficiency and customer loyalty.

Why ITC Share is good for Indian Investors

1. Defensive in Volatility

ITC’s diversified portfolio is a safe bet in downturns, gives consistent returns.

2. Dividend Income

Higher dividend yield ITC shares are good for those who want regular income from their investments.

3. FMCG Growth

FMCG in India is expected to grow big and ITC is well placed to benefit from it with its wide range of products.

Risks and Challenges

• Regulatory Risks: Cigarette business is heavily regulated and taxed. Any change in regulations or tax rates will impact profitability
• Competition: FMCG is a competitive space with domestic and international players. ITC needs to innovate and differentiate to stay ahead
• Economic Slowdown: Indian or global economic slowdown will impact consumer spending and demand for ITC’s products especially in discretionary segments like hotels and personal care.
• Supply Chain Disruptions: ITC’s business is diversified and supply chain is critical. Any disruptions due to geo political tensions, natural disasters or other factors will impact the company.

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Conclusion

ITC is a stock to be in the Indian market with diversified business, strong financials and growth initiatives. The stock price reflects the market leadership and growth potential. For investors looking for a balanced play with exposure to multiple high growth sectors ITC stock is a good option.

As ITC moves forward in the changing landscape, sustainability, digital transformation and international expansion will be key to long term value creation for shareholders. There are risks and challenges but ITC’s fundamentals and proactive approach to address them will help it to continue to do well.

In short ITC stock is backed by strong financials, growth initiatives and positive analyst outlook. Sustainability, innovation and shareholder returns makes it a good investment for long term growth and stability.

Investors should however assess their risk appetite and financial goals before investing. If you want to improve your stock market knowledge and gain confidence in making investment decisions, a Stock Market Course is the way to go. Stay informed, invest smart and watch your wealth grow with ITC share in your portfolio.

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