ITC

Share Price 274 as of 20/7/2018

Business Background:

ITC is one of India’s foremost

multi-business enterprises. Its
diversified portfolio of
businesses, spanning FMCG,
Paperboards & Packaging, Agri
Business, Hotels and
Information Technology,
enables it to have a significant
presence across all the 3 sectors
of the Indian economy, namely,
agriculture, manufacturing and
services. Powered by deep
customer insight, superior
R&D, extensive trade
marketing and distribution channels, ITC continue to gain significant consumer franchise and
market leadership across segments.

Within a relatively short span of time, ITC has established vital brands like Aashirvaad, Sunfeast,
Fabelle, Sunbean, Dark Fantasy, Mom’s Magic Bingo!, Yippee!, Candyman, mint-o, Kitchens of
India, Farmland, B Natural, ITC MasterChef in the Branded Foods space; Essenza Di Wills, Fiama,
Vivel, Engage, Savlon, Charmis, Shower to Shower and Superia in the Personal Care products
segment; Classmate and Paperkraft in Education & Stationery products; Wills Lifestyle and John
Players in the Lifestyle Apparel business; Mangaldeep in Agarbattis and Aim in the Safety
Matches segment.

Investment Highlight:

For FY 2018, it registered 1%

rise in sales to Rs 40627.54
crore. OPM improved 290
basis points to 39.3% which
saw OP rise 9% to Rs 15953.88
crore. PAT grew 10% to Rs
11223.25 crore. For FY 2018
sales from Cigarettes stood at
Rs 22894.01 crore and accounted for 47% of sales. EBIT grew 7% to Rs 13340.82 crore and
accounted for 86% of total. Sales from FMCG stood at Rs 11328.60 crore and accounted for 23%
of sales. EBIT grew 484% to Rs 164.12 crore and accounted for 1% of total
Performance of the Hotels
Business remained subdued
during the year due to the
impact of ban on sale of
liquor at outlets in close
proximity to highways in the
first half of the year. For FY
2018 sales from Hotel
Division stood at Rs 1417.51
crore and accounted for 3% of
sales. EBIT jumped 26% to
Rs 139.79 crore and
accounted for 1% of total.

For FY 2018 sales from Agri

Division stood at Rs 8067.67 crore and accounted for 16% of sales. EBIT fell 6% to Rs 848.62
crore and accounted for 5% of total. Segment PBIT was impacted by lower scale, increase in leaf
price and lower export incentives.

For FY 2018 sales from Paperboards, Paper & Packaging Division stood at Rs 5249.64 crore and
accounted for 11% of sales. PBIT grew 8% to Rs 1042.16 crore and accounted for 7% of total.
Healthy growth in PBIT was driven by richer product mix, higher in-house pulp utilization and
benign input prices.

Future

The company delivered a resilient performance during the year which was a particularly
challenging one due to steep escalation in tax incidence on cigarettes under the GST regime,
subdued demand conditions in the FMCG industry and supply chain disruptions caused during the
transition to GST.

Progressive stability of the transformative GST regime, signs of an incipient economic recovery
and expectations of normal monsoons augur well for the company’s businesses going forward.