ITC Limited is one of India's largest private sector companies with a market capitalization of $45 billion and annual turnover of $7 billion. The company was incorporated in 1910 and has created multiple drivers of growth through diversification across industries including cigarettes, hotels, paper, agri, and information technology. ITC's financial analysis shows a return on equity of 33% with earnings per share of 11.3 rupees and dividend payout ratio of 44% for the fiscal year. Recent news reports indicate the government may impose stricter regulations on tobacco sales and smoking in public, which could negatively impact ITC and other cigarette companies.

1. ITC Limited
Fundamental Analysis
Presented By: Savi Arora

2. ITC Limited Profile
ITC is one of the India’s foremost private sector companies with a
market capitalization of $45 billion and a turnover of $7 billion.
ITC was incorporated in August 24, 9010.

3. Creating Multiple Drivers of Growth

4. Industry - Position

5. Industry - competitors

6. ITC – Financials

8. Return on Equity [RoE] – DuPoint Analysis
𝑃𝐴𝑇
𝐸𝑞𝑢𝑖𝑡𝑦
=
𝑃𝐴𝑇
𝑃𝐵𝑇
𝑥
𝑃𝐵𝑇
𝐸𝐵𝐼𝑇
𝑥
𝐸𝐵𝐼𝑇
𝑆𝑎𝑙𝑒𝑠
𝑥
𝑆𝑎𝑙𝑒𝑠
𝐴𝑠𝑠𝑒𝑡
𝑥
𝐴𝑠𝑠𝑒𝑡
𝐸𝑞𝑢𝑖𝑡𝑦
Return on Equity = Tax burden 𝑥 Int. Burden 𝑥 Margin 𝑥 Efficiency 𝑥 Leverage
8990
27236
=
8990
13051
𝑥
13051
13058
𝑥
13058
31323
𝑥
31323
34984
𝑥
34984
27236
.33 = .688 𝑥 .99 𝑥 .416 𝑥 .89 𝑥 1.28

9. Ratios
• EPS
𝐸𝑃𝑆 =
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥
𝐹𝑎𝑐𝑒𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠
=
8990
795.32
= 11.3
• Price Earning
𝑃𝐸 =
𝑀𝑃𝑆
𝐸𝑃𝑆
=
351
11.3
= 31 𝑡𝑖𝑚𝑒𝑠
• Dividend per share
𝐷𝑃𝑆 =
𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑎𝑖𝑑
𝑁𝑜 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒𝑠
=
3960.92
795.32
= 4.98
• Dividend payout ratio
𝐷𝑃𝑅 =
𝐷𝑃𝑆
𝐸𝑃𝑆
=
4.98
11.3
= 44%
• Dividend yield ratio
𝐷𝑌𝑅 =
𝐷𝑃𝑆
𝑀𝑃𝑆
=
4.98
351
= 1.42%

10. 1 year Price Graph

11. ITC- Key Fundamentals
• Market Cap (Rs Cr.):279,654
• EPS - TTM (Rs):11.41
• P/E Ratio (x):30.83
• Face Value (Rs):1.00
• Latest Div. (%):600.00
• Div. Yield (%):1.70
• Book Value / sh. (Rs) :32.97
• P/B Ratio (x):10.65

12. News:
September 10, 2014
Government likely to ban sale of loose cigarettes, Rs 20000 fine for smoking
in public – a move that will hit ITC and other cigarette makers hard as 70 per
cent of retail takes place in this form.
Effect:
Shares of cigarette companies ITC, Godfrey Phillips India and VST Industries
fell by as much as 6 per cent amid media reports that the government may
tighten norms to put check on smoking.
Stocks of Godfrey Phillips slumped 6.09 per cent to Rs 2,990, while ITC was
down by 1.85 per cent to Rs 351.05 and VST Industries lost 3.58 per cent to
Rs 1,625.05 on the BSE.

13. Modi’s Effect
Since Modi came to power on May 26,
only ITC has moved up (3.7 per cent) while rival stocks have fallen.
Godfrey Phillips has lost 6.4 per cent,
VST Industries 8.5 per cent and
Golden Tobacco 30 per cent. Modi’s tweet:
“On World No Tobacco Day, let's
pledge to spread awareness on
the risks of tobacco
consumption & work to reduce
tobacco consumption in India.”