ITC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 My Thought Process

You're asking for a full-spectrum fundamental analysis of ITC Ltd, with a numeric rating and strategic investment guidance. I’ve weighed profitability, capital efficiency, valuation, and business durability, and incorporated recent financial performance and analyst sentiment as of September 2025.

📊 Fundamental Analysis of ITC Ltd

🔍 Core Financials

Profitability

PAT Qtr: ₹4,912 Cr vs ₹4,875 Cr — stable, with YoY growth of ~3%

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EPS: ₹28.1 — strong earnings base.

ROE: 27.9%, ROCE: 36.9% — excellent capital efficiency, well above industry norms.

Leverage & Liquidity

Debt-to-equity: 0.00 — debt-free, highly resilient.

Dividend Yield: 3.49% — generous, with ₹7.85/share final and ₹6.50/share interim dividends declared in FY25

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Cash Flow & Stability

FY25 revenue: ₹75,323 Cr (↑6.3% YoY); net profit: ₹19,926 Cr

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Quarterly revenue (Q1 FY26): ₹23,129 Cr; PAT: ₹5,343 Cr

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Strong cash flows from cigarettes and FMCG, despite margin pressure from inflation.

📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 26.1 Undervalued vs industry PE of 53.0

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P/B Ratio ~7.6 High, but consistent with ITC’s premium standing

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PEG Ratio 2.83 Elevated — growth not fully justifying price

Intrinsic Value ~₹460–₹470 Slight upside from current price

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🏢 Business Model & Competitive Edge

Segment Focus: Cigarettes, FMCG, Agri, Paperboards, IT, and Hotels — diversified revenue streams.

Moat: Dominance in cigarettes, expanding FMCG footprint, and strong brand equity.

Growth Drivers

Cigarette volumes up 6–7%, resilient despite taxation

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FMCG growth at 8.6% YoY; rural distribution expanded 40% in 3 years

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Hospitality demerger unlocks value and sharpens focus

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Agri exports and ITC Infotech scaling up.

📈 Technical & Entry Guidance

Current Price: ₹412

DMA 50/200: ₹412 / ₹421 — trading near support.

RSI: 51.1 — neutral zone.

MACD: 0.35 — mild bullish crossover.

🎯 Entry Zone

Ideal Buy Range: ₹400–₹410 — near DMA support.

Stop Loss: ₹385

Target: ₹470–₹490 in medium term

🕰️ Long-Term Holding Outlook

Hold if invested: Strong fundamentals, dividend yield, and diversified growth justify long-term holding.

Buy on dips: Especially near ₹405 zone.

Growth Triggers: FMCG scaling, hospitality demerger, and rural expansion.

⭐ Fundamental Rating

4.5

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Moneycontrol

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wealthyindia.in

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The Economic Times

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www.procapitas.com

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