ITC - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.1
| Stock Code | ITC | Market Cap | 3,78,138 Cr. | Current Price | 302 ₹ | High / Low | 444 ₹ |
| Stock P/E | 18.5 | Book Value | 55.8 ₹ | Dividend Yield | 4.76 % | ROCE | 38.6 % |
| ROE | 29.6 % | Face Value | 1.00 ₹ | DMA 50 | 309 ₹ | DMA 200 | 351 ₹ |
| Chg in FII Hold | -1.28 % | Chg in DII Hold | 0.25 % | PAT Qtr | 5,112 Cr. | PAT Prev Qtr | 5,295 Cr. |
| RSI | 42.9 | MACD | 0.26 | Volume | 3,16,27,108 | Avg Vol 1Wk | 2,02,32,348 |
| Low price | 287 ₹ | High price | 444 ₹ | PEG Ratio | 6.21 | Debt to equity | 0.03 |
| 52w Index | 9.38 % | Qtr Profit Var | 4.86 % | EPS | 16.2 ₹ | Industry PE | 41.3 |
📊 Financials: ITC reports quarterly PAT of ₹5,112 Cr, slightly down from ₹5,295 Cr, showing stable earnings. ROE at 29.6% and ROCE at 38.6% are excellent, reflecting strong efficiency and profitability. Debt-to-equity ratio of 0.03 highlights a near debt-free balance sheet, ensuring financial stability. EPS of ₹16.2 supports robust earnings power, though quarterly profit variation (+4.86%) indicates moderate growth.
💹 Valuation: P/E ratio of 18.5 is well below industry average (41.3), suggesting undervaluation. Book value of ₹55.8 vs current price ₹302 shows the stock trades at a premium, but justified by strong fundamentals. PEG ratio of 6.21 indicates growth is priced in, though dividend yield of 4.76% provides strong income support. Intrinsic value appears aligned with long-term fundamentals.
🏦 Business Model: ITC operates as a diversified conglomerate with FMCG, hotels, paperboards, and agri-business. Its competitive advantage lies in brand strength, diversified revenue streams, and strong cash flows. Near debt-free status and high efficiency metrics strengthen overall health.
📈 Entry Zone: Attractive entry near ₹285–300, closer to support levels. Current price reflects fair valuation relative to industry. Long-term holding is highly suitable given strong fundamentals, dividend yield, and diversified business model.
Positive
- ✅ Excellent ROE (29.6%) and ROCE (38.6%).
- ✅ Near debt-free balance sheet (Debt-to-equity 0.03).
- ✅ Strong dividend yield of 4.76% provides income stability.
Limitation
- ⚠️ PEG ratio of 6.21 indicates growth is fully priced in.
- ⚠️ EPS of ₹16.2 is modest relative to market cap.
- ⚠️ Slight decline in quarterly PAT (₹5,295 Cr to ₹5,112 Cr).
Company Negative News
- 📉 FII holdings decreased (-1.28%), showing reduced foreign investor confidence.
- 📉 Margins under pressure in hotel and paperboard segments.
Company Positive News
- 📈 DII holdings increased (+0.25%), reflecting domestic institutional support.
- 📈 FMCG segment continues to expand with strong brand portfolio.
- 📈 Consistent dividend payouts enhance investor appeal.
Industry
- 🏭 FMCG and diversified conglomerates trade at average P/E of 41.3, highlighting ITC’s undervaluation.
- 🏭 Rising demand in FMCG and agri-business supports long-term growth.
- 🏭 Hospitality and paperboard segments face cyclical challenges.
Conclusion
🔎 ITC is fundamentally strong with excellent efficiency, near debt-free status, and high dividend yield. Valuation remains attractive compared to industry peers. Entry near ₹285–300 offers a margin of safety. Long-term holding is highly suitable given diversified business model, strong cash flows, and consistent shareholder returns.
For a deeper sectoral view, we could compare ITC with HUL or Nestle India to highlight differences in valuation, margins, and growth across FMCG leaders.