ITC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.3

📊 Core Financials

• Revenue & Profit: Quarterly PAT grew from ₹4,912 Cr. to ₹5,113 Cr. (2.76% growth).
• Margins: Strong ROE (27.9%) and ROCE (36.9%) indicate efficient capital use.
• Debt: Debt-to-equity ratio is 0.00, showing a debt-free balance sheet.
• Cash Flows: Healthy dividend yield of 3.57% reflects strong cash generation.

💹 Valuation Indicators

• P/E Ratio: 25.2 vs Industry PE of 45.6 → relatively undervalued.
• P/B Ratio: Current Price ₹401 / Book Value ₹54.8 ≈ 7.3 (premium valuation).
• PEG Ratio: 2.74 → slightly expensive relative to growth.
• Intrinsic Value: Fairly valued around current levels, with limited downside risk.

🏢 Business Model & Competitive Advantage

• Diversified portfolio: FMCG, Hotels, Paperboards, Packaging, Agri, and Cigarettes.
• Strong moat in FMCG and Cigarettes with brand dominance.
• Cash-rich, debt-free, and consistent dividend payer.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive accumulation between ₹390–₹405.
• Long-Term Holding: Strong fundamentals, healthy dividend, and diversified business make ITC a stable compounder.

✅ Positive

• Debt-free company with strong ROE & ROCE.
• Consistent dividend yield of 3.57%.
• Diversified business reducing sectoral risk.

⚠️ Limitation

• High P/B ratio indicates premium valuation.
• PEG ratio suggests slower earnings growth relative to valuation.
• Stock price momentum weak (RSI 43.4, MACD negative).

📉 Company Negative News

• Decline in FII holding (-0.59%).
• Regulatory risks in cigarette business.

📈 Company Positive News

• Quarterly profit growth of 2.76%.
• DII holdings increased (+0.50%).
• Strong FMCG growth and expansion in packaged foods.

🏭 Industry

• Industry PE at 45.6 indicates ITC trades at a discount.
• FMCG sector growth remains robust with rising consumer demand.
• Hotels and paperboard segments recovering post-pandemic.

🔎 Conclusion

ITC remains a fundamentally strong, debt-free, dividend-paying company with diversified revenue streams.

Though valuations are slightly stretched on P/B and PEG, relative undervaluation compared to industry PE makes it attractive.

Accumulation near ₹390–₹405 is recommended for long-term investors seeking stability and steady returns.