A meticulous analysis of share performance becomes imperative in the dynamically evolving investing landscape, where one decision can make or break portfolios. Recently, ITC share price has been creating a buzz in the lanes of the stock market as it marks its notable presence in the “Buy” recommendations of most investment advisory.
So, join us on this journey as we dissect the numbers, examine the trends, and analyze the share performance of ITC share price versus its competitors. In this report, we will conduct a comparative analysis of ITC and its peers in the diversified sector, using various financial ratios and indicators.
Overview of India Tobacco Company Ltd (ITC Ltd)
India Tobacco Company Ltd (ITC Ltd) is a leading Indian conglomerate with a diversified portfolio of businesses across various sectors, such as FMCG, hotels, paperboards, packaging, agri-business, and IT.
The Imperial Tobacco Company of India Limited was established in 1910 and changed its name to ITC Limited in 2001. With a market share of over 75%, ITC is the leading cigarette manufacturer in India. The company also has a strong presence in food processing, personal care, branded apparel, education, stationery, incense sticks, and safety match segments.
ITC Ltd is a favourite choice of any investment advisory. The primary reason is that the company has a competitive advantage in its core business of cigarettes, which generates high margins and cash flows.
The company also has a potential for growth in its other businesses, especially in the FMCG segment, which may benefit from the rising disposable income and consumption patterns of Indian consumers.
Highlights of ITC Company
- ITC has a market capitalization of Rs. 5,42,886 crore and a revenue of Rs. 72,917 crore in the financial year 2022-23.
- The company has also been paying dividends to its shareholders, with a dividend yield of 5.4% as of March 31, 2023.
- ITC has a strong balance sheet, with a net debt-to-equity ratio of 0 as of March 31, 2023.
- ITC’s Renewable Energy capacity has reached nearly 178MW, constituting around 43% of its energy from renewable sources.ITC is Plastic Neutral for the 2nd consecutive year
- The company’s FMCG Businesses recorded Segment Revenue of 19122.50 crores, representing an increase of 19.6% over the previous year.
- Segment EBITDA for the year registered a robust growth of 34.9% to 1953.97 crores, improving margins by 120 bps to 10.2%.
Google Sheet Link:https://docs.google.com/spreadsheets/d/1YlnzGCR3wEy_gvTVig245wGdMkVedAvKPZ8kMLJDrLg/edit?usp=sharing
ITC vs Competitors
Let’s go over the chart below to study the performance of ITC share price vs its competitors-
| Company | Current Share Price (in Rs. ) | P/E (TTM) | P/B | MKT. CAP (in Lac Cr) | ROE (in %) | Div. Yield (in %) |
| ITC LTD | 437.25 | 26.90 | 7.86 | 542886 | 29.21% | 3.55% |
| Godfrey Phillips | 2022.45 | 13.06 | 2.77 | 10,489 | 21.18% | 2.18% |
| Nestle India | 24,067.50 | 78.56 | 81.71 | 2,33,412 | 95.37% | 0.91% |
| Britannia | 4,803.65 | 44.80 | 39.89 | 1,13,608 | 78.36 | 1.53% |
| Varun Beverages | 1060.85 | 68.78 | 21.18 | 1,37,444 | 28.95 | 0.17% |
Comparing ITC share price with its competitors, we can see that:
- Godfrey Phillips has the lowest P/E and P/B ratios among its competitors, meaning it is undervalued or underpriced compared to its earnings and book value. It also has a high ROE, making it highly profitable and efficient. However, it has a low market capitalization and dividend yield.
- Nestle India has the highest P/E and P/B ratios among its competitors, indicating that it is overvalued compared to its earnings and book value. It also has the highest ROE but a low dividend yield, so it pays its shareholders a low proportion of its earnings as dividends.
- Varun Beverages and Britannia have high P/E and P/B ratios that indicate that these stocks are overpriced or overvalued compared to their book price.
- ITC has a moderate ROE, which measures the return on equity. It means it generates a decent profit from its shareholders’ equity. ITC’s ROE suggests it is profitable and efficient, but not as much as some competitors.
Factors Contributing to ITC Share Price:
- ITC has a moderate P/E ratio, which measures the price-to-earnings ratio. It means its share price is reasonable compared to its earnings per share. ITC’s P/E ratio suggests it is fairly valued with a good growth potential.
- ITC has a high P/B ratio, which measures the price-to-book value ratio. ITC’s P/B ratio suggests that it has a high brand value and competitive advantage in its core business of cigarettes, but it may also face the risk of being overpriced.
The Bottom Line
ITC has the highest market capitalization among its competitors, and ITC share price can be due to its large size and scale in the diversified sector. It also has the highest dividend yield, which means it pays a higher proportion of its earnings as dividends to its shareholders. It shows its commitment to rewarding its investors and confidence in its future growth prospects.
ITC Ltd is a well-established and diverse company that provides long-term investment opportunities for investors seeking consistent returns and growth opportunities. ITC is one of the stocks with the most “Buy” recommendations from the top investment advisory, but you should do your homework before making the ultimate decision.
