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X

ITC Ltd.

Large Cap

Evaluated by 7632 users |

BSE

: 500875 |

NSE

: ITC |

Cigarettes/Tobacco

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Decision Maker
Standalone basis
The valuation guidance of this company is based on Standalone basis.
1. Right Stock
This company is among the most fundamentally sound companies on account of its consistent performance on both the colour-coding parameters - Value Creation & Business Growth.
2. Right Price
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Analysis of Financial Track Record

Data adjusted to bonus, split, extra-ordinary income, rights issue and change in financial year end
10 Year X-Ray
MoneyWorks4me Colour Coding
Value Creation To be investment worthy, a company has to create a shareholder value in excess of its cost of capital employed. VCI (Value Creation Index) shows how efficient has the company been in doing this.
Value Creation Index: Colour Rating Guide
  • >0.25 : Very Good
  • 0 to 0.25 : Somewhat Good
  • <0: Not Good
 Mar'05Mar'06Mar'07Mar'08Mar'09Mar'10Mar'11Mar'12Mar'13Mar'14
Return on Capital Employed
The return on capital employed gives a sense of how well a company is using its money to generate returns.
27.03%26.55%27.53%27.24%25.16%29.13%32.76%35.04%35.41%35.48%
Value Creation Index
The difference between ROCE and WACC as a Proportion of WACC reveals the extent of value created by a company.
Ie. (ROCE-WACC)/WACC
ROCE is Return on Capital Employed
WACC is Weighted Average Cost of Capital
1.901.311.201.472.483.172.923.16NANA
Growth Parameters Growth Parameters help gauge a company's growth in the past 10 years. A value creating company needs to grow at a sustainable pace to continue creating value.
For Net Sales and EPS Growth Rate
  • >12% : Very Good
  • 8% to 12% : Somewhat Good
  • <8% : Not Good
For Debt To CFO
  • 0 to <1.5 : Very Good
  • 1.5 to <3 : Somewhat Good
  • >3 or <0: Not Good
Net Sales (Rs. Cr.)
Net Sales is calculated by deducting excise duty, sales tax and other such deductible indirect taxes from the gross sales of a company.
7,6399,79112,16413,94815,61218,15321,45925,14729,90133,239
Y-o-Y Gr. Rt.-28.2%24.3%14.7%11.9%16.3%18.2%17.2%18.9%11.2%
Adjusted EPS (Rs.)
Adjusted Earning per Share is the company’s net profit per share after adjusting for extra-ordinary/exceptional items
2.623.043.614.114.325.276.327.749.1510.84
Y-o-Y Gr. Rt.-16%18.8%13.9%5.1%22%19.9%22.5%18.2%18.5%
Book Value per Share (Rs.)
The total value that a company will fetch upon liquidation (if it is closed down), after settling all obligations is called its Book Value. Book value of a company includes only tangible assets. Book value allocated to each outstanding share is called Book Value per share
10.5211.9913.815.9218.1218.3520.5523.9728.1432.95
Adjusted Net Profit Adjusted Net Profit is a measure of company's profitability after accounting for all costs and adjusting for one time events. 1,9472,2842,7173,0943,2614,0274,8896,0527,2288,621
Net Op. Cash Flow (Rs. Cr.)
This refers to the amount of cash a company generates from the revenues less operating expenses.
1,8511,9302,1412,7233,2424,6425,3336,0166,7106,962
Debt to Cash Flow from Ops
Debt to CFO (Cash Flow from Operations) conveys the number of years it will take for a company to repay its debt, given the cash generated from operations.
CFO: It is the amount of cash generated by the company through its core business operations without looking at the impact of its capital structure. It indicates whether the company is able to generate sufficient cash from its operations to maintain and run its operations.
0.130.060.090.080.050.020.020.010.010.01
CAGR
The Growth rate helps you understand how the company has performed over different time frames.
CAGR Colour Code Guide
CAGR Colour Code Guide
  • >12% : Very Good
  • 8% to 12% : Somewhat Good
  • <8% : Not Good
  9 yrs 5 yrs 3 yrs 1 yr
Net Sales
Net Sales is calculated by deducting excise duty, sales tax and other such deductible indirect taxes from the gross sales of a company.
17.8%16.3%15.7%11.2%
Adjusted EPS
Adjusted Earning per Share is the Company’s net profit per share after adjusting for extra-ordinary/exceptional items.
17.1%20.2%19.7%18.5%
Book Value per Share
The total value that a company will fetch upon liquidation (if it is closed down), after settling all obligations is called its Book Value. Book value of a company includes only tangible assets. Book value allocated to each outstanding share is called Book Value per share
13.512.71717.1
Key Financial Parameter The key financial ratios show the growth and sustainability of the Value Creation Index.
Performance Ratios: Colour Rating Guide
  • >12% : Very Good
  • 8% to 12% : Somewhat Good
  • <8% : Not Good
Debt to Equity Colour Rating Guide
  • 0 to 1 : Very Good
  • >1 to 2 : Somewhat Good
  • >2 or <0: Not Good
Return on Equity (%)
Return on Equity shows the amount of net profit generated as a percentage of shareholders equity. 
ROE measures a company's profitability over the money shareholders have invested. 
27.2326.9427.8727.5125.2928.9732.5734.8435.1935.51
Operating Profit Margin (%)
Operating Profit Margin shows how much profit a company makes (before interest payment and taxes) on sales. It is advisable to look at the change in a company’s operating margin over time and compare the company's yearly or quarterly numbers to those of its competitors.
36.7434.3932.9131.8631.5333.7834.7535.4935.5937.82
Net Profit Margin (%)
NPM (Net Profit Margin) is the ratio of profit, net of taxes and interests to sales. It is advisable to look at changes in a company’s NPM over time and to compare them with the competitor’s NPM.
25.4923.3322.3322.1920.8922.1822.7824.0724.1725.94
Debt to Equity
This ratio indicates the ratio of equity to debt the company employs to finance its operating assets.
0.030.010.020.020.010.010.01000
Working Capital Days
This is the number of days that a company will take to convert its working capital into revenue.
9588921011079889858391
Cash Conversion Cycle
Cash Conversion Cycle is a company's net working capital (creditors, debtors and inventory) expressed in terms of days
-128-54-37-28-21-293323133
Management Assessment
Management Assessment
An assessment of the trustworthiness of the management based on 5 important parameters. These parameters are colour coded as
Green (Very Good), Orange (Somewhat Good) and Red (Not Good)
What do we look at?
Management Assessment: An assessment of the trustworthiness of the management based
on 5 important parameters. These parameters are colour coded as Green (Very Good),
Orange (Somewhat Good) and Red (Not Good)
Corporate Governance
Corporate Governance
This refers to a set of processes or laws that affects the way a company is directed and controlled.
Board Credentials
Board credentials
This refers to the skill sets (qualification, experience, etc.) that the management team of a company possesses.
Promoter's holding
Promoter's holding
This refers to the stake that the promoters hold in a company and proportion of shares pledged.
Transparency
Transparency
Transparency refers to the practices that a company follows in the disclosure of important and necessary information.
Integrity
Integrity
Integrity refers to the application of honest and fair business practices.

Percentage Holding
54.24%
45.50%
0.26%

Pledged *0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00
*  Pledged shares as % of Promoter's holding (%)

The standalone 10 Year X-Ray of ITC Ltd. has been considered for analysis.

The 10 Year X-Ray of ITC Ltd. shows that the performance of the company has been very good over the last 10 years. ITC is one of the few companies which have shown consistently high positive value creation over the last 10 years.ROCE and ROE figures have been ve ... Read more

The standalone 10 Year X-Ray of ITC Ltd. has been considered for analysis.

The 10 Year X-Ray of ITC Ltd. shows that the performance of the company has been very good over the last 10 years. ITC is one of the few companies which have shown consistently high positive value creation over the last 10 years.ROCE and ROE figures have been very good with 6 years’ average figure of 30% each respectively.Margin being the major driver of ROCE, its movement is highly influenced by trends of margins over the years.

With a monopolistic position in the cigarette business (the major revenue contributor) and addictive nature of the product leading to inelastic demand, Net Sales have registered a growth of more than 12% for almost all the years. Also, with this leadership position and a strong brand image, it has been able to pass on excise duty hikes by government to the consumers and thus maintained its margins. This growth has also translated to EPS which has grown at ~18% over the last 10 years.

With retention of close to 41% of its profits over the last 6 years, Book value per share has also shown good growth except in FY 2010, when company paid out special dividend. The cigarette business is a strong cash generator while cash consuming businesses like Lifestyle retailing, Personal care, Foods etc. are slowly moving towards breaking even. This combined with very efficient working capital management has helped ITC’s strong cash generation.

Cash conversion cycle has increased from negative 29 days to 31 days. This seems to be driven by the increasing focus and share of revenue from other FMCG categories and the company will not enjoy the same bargaining power as it does in cigarettes. The company is a virtually debt free company which is a big positive sign.

Thus, considering all these factors, we can say that the 10 Year X-Ray of ITC Ltd. isGreen (Very Good).

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