Attractive yield stock from the elite FMGC pack
STOCK BASICS
REGD OFFICE : KOLKATA
INCORPORATION : August 24, 1910
PROMOTER : Originally a British company, progressively Indianised. Presently, major equity chunk is held by domestic insurance companies, mutual funds, institutions and foreign portfolio investors
MANAGEMENT : Professional team headed by Sanjiv Puri (59) who joined the company in 1986. He is assisted by three Executive Directors.
ACTIVITY : Mult-business conglomerate – FMGC (Cigarettes, Food Products, Personal Care, Stationery, Safety Matches, Agarbattis & Dhoop, etc.) Hotels, Paperboards, Packaging, Agriculture and IT.
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PEER COMPARISON |
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Financials |
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| (Amount in Cr) | ITC | Hind Uni | Nestle | Dabur | Godrej Cons |
| Market Cap | 275112 | 565669 | 190015 | 104120 | 95250 |
| Borrowing | 4 | 0 | 35 | 483 | 760 |
| Fixed Assets | 25176 | 34791 | 2607 | 2004 | 3832 |
| Revenue | 53155 | 47028 | 13350 | 9562 | 11029 |
| Other Income | 2633 | 410 | 146 | 325 | 67 |
| EBIDTA | 19628 | 11796 | 3347 | 2327 | 2411 |
| Interest | 45 | 117 | 164 | 31 | 127 |
| Net Profit | 13383 | 7999 | 2082 | 1695 | 1721 |
| Equity Cap | 1232 | 235 | 96 | 177 | 102 |
| Reserves | 59116 | 47439 | 1923 | 7487 | 9337 |
- Long standing track record with well diversified business interests
- World class Indian brands driving growth
- Virtually a zero-debt company with net profit bulging ten times equity capital
- Depreciation provision of over Rs 1600 Cr per annum
- Large equity base attracts sizable investment from institutional investors
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Stock Features |
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| (Amount in Cr) | ITC | Hind Uni | Nestle | Dabur | Godrej Cons |
| Current Price (Rs) | 223 | 2407 | 19707 | 589 | 931 |
| Face Value (Rs) | 1 | 1 | 10 | 1 | 1 |
| Book Value | 49 | 203 | 209 | 43 | 92 |
| Promoter Stake % | 0 | 61.9 | 62.8 | 67.4 | 63.2 |
| Debt/Equity | 0 | 0 | 0.02 | 0.06 | 0.08 |
- Current price lowest among the frontline FMGC stocks
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Profitability |
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| (Amount in Cr) | ITC | Hind Uni | Nestle | Dabur | Godrej Cons |
| OPM % | 32.0 | 24.7 | 24.0 | 20.9 | 22.2 |
| Net Margin % | 24.0 | 16.9 | 15.4 | 17.1 | 15.6 |
| Cash EPS | 12.02 | 38.59 | 254.39 | 10.95 | 18.82 |
| Earnings Per Share | 10.68 | 34.02 | 215.97 | 9.59 | 16.83 |
- Operating Margin and Net Margin highest among the leading FMGC pack
| Growth | |||||
| (Amount in Cr) | ITC | Hind Uni | Nestle | Dabur | Godrej Cons |
| CAGR 3Yr Sales % | 4.1 | 9.3 | 9.3 | 7.7 | 3.7 |
| CAGR 3Yr EBIDTA % | 1.6 | 14.5 | 13.8 | 6.8 | 0.8 |
- Decent top line growth with attractive profitability
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Return |
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| (Amount in Cr) | ITC | Hind Uni | Nestle | Dabur | Godrej Cons |
| RONW % | 22.2 | 16.8 | 103.1 | 22.1 | 18.2 |
| ROCE % | 29.8 | 22.5 | 144.9 | 25.6 | 21.6 |
- Healthy Return on Equity as well as Return on Capital Employed
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Discounting |
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| (Amount in Cr) | ITC | Hind Uni | Nestle | Dabur | Godrej Cons |
| Price/Earnings | 20.9 | 70.75 | 91.25 | 61.43 | 55.35 |
| Price/Cash EPS | 18.58 | 62.37 | 77.47 | 53.81 | 49.49 |
| Price/Book Value | 4.56 | 11.87 | 94.1 | 13.59 | 10.09 |
| Price/EBIDTA | 14.02 | 47.95 | 56.77 | 44.75 | 39.51 |
| Price/Revenue | 5.18 | 12.03 | 14.23 | 10.89 | 8.64 |
| Price/Fixed Assets | 10.93 | 16.26 | 72.9 | 51.96 | 24.85 |
- Compared to the discounting of other major FMGC stocks, the Price/Earnings, Price/Book Value, Price/Revenue and Price/Assets multiples of ITC look dirt cheap
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Distribution |
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| (Amount in Cr) | ITC | Hind Uni | Nestle | Dabur | Godrej Cons |
| Dividend % | 1075 | 3100 | 2000 | 475 | 0 |
| Yield % | 4.8 | 1.3 | 1.0 | 0.8 | 0 |
| Pay-out % | 99 | 91 | 93 | 50 | 0 |
- ITC follows a very liberal distribution policy year after year
- Among the FMGC majors, ITC offers the most attractive dividend yield, which is better than even Savings Bank rate
Conclusion
Those who are looking for steady dividend income can bank on ITC which can not only fetch good dividend yield but can also bring decent capital appreciation in the long run.