ITC Limited, a multinational corporation founded in 1910, operates in a variety of industries, including hotels, paperboards and packaging, agribusiness, information technology, and fast-moving consumer goods (FMCG), which include foods, personal care products, cigarettes, cigars, branded apparel, and incense sticks and safety matches. On August 24, 1910, the company was founded under the name Imperial Tobacco Company of India Limited.
The name of the company was changed to India Tobacco Company Limited in 1970 and subsequently to I.T.C. Limited in 1974 as the ownership of the company gradually became Indian. On September 18, 2001, the full stops in the company’s name were eliminated in acknowledgement of the ITC’s diverse business portfolio comprising a wide variety of industries. The company is now known as “ITC Limited,” where “ITC” is no longer an initial or an abbreviation.
History and Evolution
The company’s origins were modest. The company’s operations were centered in a rented office on Radha Bazar Lane in Kolkata. On its sixteenth birthday, August 24, 1926, the company paid Rs 310,000 for a piece of land located at 37, Chowringhee (now renamed J.L. Nehru Road) in Kolkata. It was to serve as the start of a protracted and exciting trip into India’s future. Two years later, the company’s headquarters building, known as “Virginia House,” was constructed on that site and went on to become one of Kolkata’s most recognizable monuments.
1925: Packaging and Printing: Backward integration
ITC’s Packaging & Printing business was established in 1925 as a strategic backward integration for ITC’s cigarette business, even though the company’s first six decades of existence were principally focused on the expansion and consolidation of the cigarette and leaf tobacco industries. Today, it is one of the most advanced packaging companies in India.
1975: Entry Into The Hospitality Sector
The 1970s saw the start of a corporate transition that would bring about significant changes in the company’s history. The company started its hotel division in 1975 by purchasing a hotel in Chennai, which it renamed the “ITC-Welcomgroup Hotel Chola” (now renamed Welcomhotel by ITC Hotels, Cathedral Road, Chennai). ITC selected the hotel industry because it has the ability to produce substantial levels of foreign exchange, develop tourism infrastructure, and produce a significant number of direct and indirect jobs. ITC’s hotel division has since expanded to take the lead in the industry with over 113 owned and managed hotels distributed across India under the four brands ITC Hotels, Welcomhotel, Fortune Hotels, and WelcomHeritage. With an impending super-premium luxury hotel in Colombo, Sri Lanka, ITC Hotels just made its first move toward global expansion.
1979: Paperboards & Specialty Papers – Development Of A Backward Area
ITC promoted ITC Bhadrachalam Paperboards Limited in 1979 in order to enter the paperboard industry. With effect from March 13, 2002, Bhadrachalam Paperboards merged with the company and was renamed the Bhadrachalam Paperboards Division. The company’s Tribeni Tissues Division and this division merged in November 2002 to establish the Paperboards & Specialty Papers Division. Additionally, it has significantly aided in the development of Sarapaka, a region of Andhra Pradesh that is economically underdeveloped. It actively contributes to community growth, environmental preservation, and education. ITC purchased the paperboard manufacturing plant of BILT Industrial Packaging Co. Ltd. (BIPCO), located not far from Coimbatore, Tamil Nadu, in 2004.
1985: Nepal Subsidiary – First Steps Beyond National Borders
In 1985, ITC established the Indo-Nepal and British joint venture, Surya Tobacco Co., in Nepal. In August 2002, Surya Tobacco changed its name to Surya Nepal Private Limited and became a subsidiary of ITC Limited (Surya Nepal). The business expanded into clothing manufacturing and exporting in 2004.
1990: Paperboards & Specialty Papers – Consolidation And Expansion
ITC bought Tribeni Tissues Limited, a manufacturer of specialty papers and a significant tissue paper supplier to the cigarette industry, in 1990. Tribeni Tissues Division (TTD) was the name given to the merged entity. In November 2002, TTD and the Bhadrachalam Paperboards Division amalgamated to create the Paperboards & Specialty Papers Division in order to take advantage of strategic and operational synergies.
1990: Agri-Business – Strengthening Farmer Linkages
In 1990, ITC established the Agri-Business Division to facilitate the export of agricultural products, utilizing its expertise in agricultural sourcing. The division is currently among India’s top exporters. In 2000, soybean farmers in Madhya Pradesh launched ITC’s innovative and now well-known e-Choupal project. It now covers more than 4 million farmers in 10 states. Additionally, the Agri services vertical has been concentrating on enhancing agricultural productivity while strengthening ties with the farming community through the “Choupal Pradarshan Khet” project.
2002: Offering The Greenest Products In The Education And Stationery Sectors
In 2002, ITC introduced a line of high-quality notebooks under the trademark Papercraft. In order to broaden its selection and appeal to more students, the Classmate line of notebooks was introduced in 2003. Over the years, Classmate has developed into India’s top notebook brand and expanded its product line to take up more space in school bags. Under the “Classmate” brand, practical books, drawing books, geometry boxes, pens, and pencils were introduced between 2007 and 2009.
2000: Business-Friendly Solutions for Information Technology
In order to pursue new opportunities in this industry more aggressively, ITC split off its information technology division in 2000 into a wholly owned subsidiary, ITC Infotech India Limited. ITC Infotech has established itself as a key player in offshore outsourcing, offering outsourced IT solutions and services to leading global customers across key focus verticals like Banking, Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG), Retail, Manufacturing, Engineering Services, Media & Entertainment, Travel, Hospitality, Life Sciences, and Transportation & Logistic.
Highlights of Financial Results for the Quarter ended June 30th, 2022
- On a year-over-year basis, gross revenue increased by 41.0% and EBITDA by 41.5%;
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- The company witnessed robust performance across all segments.
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- The overall segment PBIT margin (ex-Agri Business) increased by 245 bps to 36.9%.
- Stability in cigarette taxes, reinforced by deterrent actions by enforcement authorities, enables green shoots of illicit trade volume recovery
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- Segment Revenue up 29.0% year over year; Segment EBIT up 30.1% year over year
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- A strengthened market position as a result of targeted portfolio/market interventions and quick execution.
- Strong performance in FMCG’s (fast-moving consumer goods) other segments; revenue increased by 19.5% year over year and 45.5% in Q1 FY20.
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- Staples & Convenience Foods remained resilient; robust rise in discretionary/Out-Of-Home categories
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- With the reopening of educational institutions, the stationery and educational supplies business recovered.
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- Sales of the hygiene portfolio remained subdued despite being greater than they were before the outbreak.
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- Despite significant inflationary headwinds, EBITDA margin was maintained (-20 bps y-o-y); up 190 bps over Q1 FY20
- Revenue in hotels increased sharply at 41.4% over Q1 FY20.
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- Retail (packages), leisure, weddings, and MICE segments drive growth; ARR and occupancy are ahead of pre-pandemic levels.
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- EBITDA margins increased to 32.5% (from 17.5% in Q1 FY20) as a result of structural interventions and higher RevPAR (revenue per available room).
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- Segment EBITDA at 180 cr (positive swing of 268 cr. y-o-y; up 111 cr. over Q1 FY20)
- The agribusiness segment’s revenue increased by 82.7% year over year, driven by exports of wheat, rice, and leaf tobacco.
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- Leveraged strong customer relationships, a solid sourcing network, and agile execution
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- ITCMAARS ( ITC Meta Market for Advanced Agricultural Services ) was launched in 7 states, spanning 200+ FPOs, and has so far registered over 75,000 farmers.
- The Paperboards, Paper, and Packaging segment performed well, with revenue increasing by 43.3% year over year and margins expanding by over ~220 bps
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- Strong demand across end-user categories; expansion of the offering of sustainable products.
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- Margin increase is made possible by an integrated business strategy, Industry 4.0 efforts, and strategic investments in areas like pulp import substitution and proactive capacity augmentation in the Value Added Paperboards segment.
FMCG – OTHERS
- The FMCG businesses performed well, with Segment Revenue increasing 19.5% year over year and Segment Revenue and Segment EBITDA increasing 45.5% and 91.9% over Q1 FY20, respectively.
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- Discretionary/Out-of-Home categories like snacks, drinks, candies, frozen snacks, fragrances, and agarbattis experienced significant growth.
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- Stationery and educational supplies With the reopening of educational institutions, business improved.
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- Segment EBITDA margins held steady (-20 bps y-o-y) despite unprecedented commodity inflation; a multi-pronged approach to cost management, premiumization, supply chain agility, prudent pricing, fiscal incentives, leveraging digital, channel assortment optimization, and a favourable business mix helped to temper the sharp increase in input costs. Over Q1 FY20, margins have increased by 190 bps.
- The company’s extensive multi-channel distribution network, which includes a growing presence in developing channels and channel-specific assortments that are suited to them, continues to give it a competitive advantage through greater product availability, visibility, and freshness.
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- Market and outlet coverage are at pre-pandemic levels of 2.0x and 1.3x, respectively.
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- With the help of account-specific strategies, new product introductions (including e-Commerce first brands), and customized supply chain solutions, the e-commerce channel has continued to expand. Ecommerce sales are now nearly 4.2 times higher than they were in the first quarter of FY20, and the channel salience is now around 7%.
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- Modern Trade revenues increased as a result of better mobility, more store traffic, and collaborative business planning with important accounts.
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- Leveraging new routes to market through several strategic agreements encompassing a variety of brands, such as “B Natural,” “Sunfeast,” “Kitchens of India,” “ITC Master Chef,” etc., product availability and accessibility continue to be improved.
- The Telangana location’s new ICML (integrated consumer goods manufacturing) opened its doors in March 2022. This allows for the supply of fresher products, a decrease in distance to market, and greater cost agility. Ten ICMLs are now active in areas close to key demand centres. Along with next-generation flexible supply chains, three co-located automated logistics facilities have been constructed, enabling better and more effective fulfilment.
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- Several of these manufacturing plants have the highest levels of workforce gender diversity in the industry. With each subsequent ICML that has come online, the representation of women has grown steadily, and the most recent ICMLs in Pudukkottai and Medak feature a sizable female workforce that is on roll, reflecting the company’s dedication to promoting diversity and inclusion.
- To increase productivity, boost efficiency, and decrease costs, the FMCG Businesses continue to invest in cutting-edge digital technology across all operational nodes, including synchronized planning & forecasting, smart manufacturing & sourcing, expanding consumer connect, and agile execution.
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- Over 3.2 lakh merchants have access to “Unnati,” a digitally driven eB2B platform that enables more focused and direct interactions with retailers; superior analytics; individualized suggestions of hyperlocal baskets based on consumer purchasing insights, and deeper brand engagement.
FMCG Cigarettes
- Segment results and revenue both increased year over year by 29.0% and 30.1%, respectively.
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- By strengthening the product range through innovation, democratizing premiumization across segments, and boosting product availability backed by outstanding on-the-ground execution, the business continues to combat illicit trade and strengthen its market position.
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- To further enhance and guarantee the product range is prepared for the future, the ITC also continues to release a number of distinct versions.
- As has been demonstrated in the past, stable cigarette tax rates, supported by enforcement agency deterrent actions, enable the legal cigarette industry to recover some of the volumes lost to illegal trade, stimulating domestic demand for Indian tobacco while also minimizing the loss of tax revenue to the exchequer.
Hotels
- Excellent results across all sites; Segment Revenue of Rs. 555 crores (up 41.4% from Q1 FY20); Positive change of 268 crores in EBITDA year over year (Q1 FY23 at 180 cr.)
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- Retail (packages), leisure, weddings, and MICE (Meetings, Incentives, Conferences & Exhibitions) categories are driving ARR (Average Room Rate) and occupancy levels above pre-pandemic levels.
- EBITDA margins increased to 32.5% for the quarter from 17.5% in Q1 FY20 due to greater RevPAR, operating leverage, and structural cost initiatives.
- Digital investments are still being used to increase visitor acquisition, guest satisfaction, revenue generation, and operational effectiveness. Recently, the company debuted its full-stack ITC Hotels App, which features a cutting-edge user interface and enables quick and easy access to reservations for rooms and food and beverages, offers for food delivery, loyalty rewards, and a variety of special deals. The popularity of the app keeps growing.
Frequently Asked Questions (FAQs)
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What is the ITC share price?
ITC share price was INR 342.90 as of September 21, 2022.
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What are the 52-week high and low ITC shares price?
As of September 21, 2022:
52-wk high 345.00
52-wk low 207.00
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What are the key metrics to analyze ITC Limited?
Key metrics of to analyze any share price are a 52-week high, a 52-week low, a 1-year return, a 5-year return, etc.
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Who are the peers of ITC Limited?
ITC Limited’s peers include Godfrey Phillips India Ltd., VST Industries Ltd., Golden Tobacco Ltd., etc.
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What is the market cap of ITC Share Price?
The market cap of ITC Share price is 4.2 lakh crore as on September 21, 2022.
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