ITC - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

📦 Investment Analysis: ITC Ltd.

Investment Rating: 4.2

🧠 Core Business Strengths

ROE (27.3%) and ROCE (36.8%) are stellar, highlighting exceptional capital efficiency and strong profitability.

Zero debt makes ITC financially robust with high resilience to interest rate cycles or economic shocks.

EPS of ₹27.8 and consistent PAT growth (Q-o-Q +8.4%) demonstrate solid earnings power.

Dividend yield of 3.51% adds attractive passive income potential — particularly valuable for long-term investors.

🔍 Valuation & Trend Signals

Stock P/E (25.9) is significantly lower than industry average (42.1) — suggests undervaluation despite strong fundamentals.

PEG Ratio (2.84) implies valuation is stretching compared to earnings growth; however, brand strength and pricing power help balance this.

RSI (35.3) & MACD (-2.22) confirm bearish sentiment — nearing oversold territory.

Trading below both 50-DMA (₹418) and 200-DMA (₹425) — signifies short-term weakness, but long-term opportunity.

🎯 Ideal Entry Price Zone: ₹395 – ₹410 This range hovers around key support and psychological levels, aligning with low RSI and declining trend — presenting an entry chance before potential recovery.

🛡️ Holding or Exit Strategy

✅ Hold Strategy

Time Horizon: 3–5 years for optimal compounding

Stay invested if

ROCE remains >30% and ROE >25%

PEG improves to <2.0 as revenue streams grow across FMCG, hotels, and paper divisions

Annualized EPS crosses ₹35 with improving margins

🚪 Exit Strategy

Partial exit near ₹475–₹490 to lock profits near prior highs

Full exit only if

ROE dips below 20% for 2 consecutive quarters

PEG remains above 3.0 despite earnings stability

Weak institutional activity persists (e.g., FII drop ≥ 2% over multiple quarters)

ITC blends defensive strength with diversification across sectors — from cigarettes to FMCG to agriculture — making it a powerhouse for portfolio stability, especially in uncertain markets. If you're aiming to build a dividend-rich core with low volatility, ITC’s fundamentals shine.

Want help comparing it to HUL, Nestlé, or Godrej Consumer to map out a balanced FMCG strategy? Let’s slice through that next 🍫📊

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