ITC to Invest Rs 20,000 Crore in Expansion

ITC Limited is an Indian multi-industry company headquartered in Kolkata.  It has a presence across six different business segments, namely fast-moving consumer goods (FMCGs), hotels, agribusiness, information technology, paper products, and packaging. It generates a plurality of its revenue from tobacco products.  ITC Ltd. currently holds the position of the second-largest FMCG company in India and the third-largest tobacco company in the world in terms of market capitalization.

113th annual general meeting outcome:

Multi-industry firm ITC Ltd. will invest Rs 20,000 crore in the next five years, largely in its FMCG vertical for capacity boost, modernisation and innovation, company MD and Chairman Sanjiv Puri said in the 113th annual general meeting of the ITC.  Mr. Puri informed shareholders at the company’s 113th annual general meeting that ITC was dedicated to supporting the country in becoming the world’s third-largest economy by developing a future-oriented, environmentally friendly, innovative, and inclusive national enterprise of pride. He emphasized the company’s unwavering confidence in the India story, which is evident in the planned investment of approximately Rs 20,000 crore in the medium term. Detailing the investment allocation, he mentioned that the fast-moving consumer goods (FMCG) business would receive the largest share at 35–40%, while paperboards and packaging would account for 30–35%.

Overall, over 70% of the investment will be directed towards the FMCG, paperboard, and packaging sectors, with the remaining funds allocated to other businesses, including agriculture. Regarding paperboards and packaging, the current manufacturing facility in Bhadrachalam, Telangana, is operating at full capacity.

ITC reported Rs. 69,446 crore in FY24:

ITC reported gross revenue of Rs. 69,446 crore in FY24 and a profit of Rs. 20,422 crore. Non-cigarette revenue now accounts for approximately 65% of net revenue.  The revenue of the cigarette business grew at a CAGR of nearly 13.5% over the last two years, with volumes surpassing pre-pandemic levels. Following a period of persistent challenges, the hotel industry recovered structurally, with revenue approaching Rs. 3,000 crore and EBITDA surpassing ₹1,000 crore in FY24, according to Mr. Puri.  Over the last four years, ITC’s operations have added value totaling approximately Rs. 24.2 trillion, of which more than Rs. 16.1 trillion has gone to the exchequer, according to Puri.  Last year, the company announced the demerger of its hotel business into a separate entity.

ITC stock update: 

Today in the intraday segment, the ITC stock price is declining by 1%, and the stock is currently trading at Rs. 497.20 per share, with the opening price at Rs. 505.50 per share. The ITC results are scheduled to be released on August 1, 2024, for Q1 FY25, providing more insights into the company’s revenue for the respective quarter.

Conclusion: The ITC sees a great opportunity in India, which is why it was decided at the 113th annual meeting that they will invest a minimum of 35–40% in the FMCG sector, amounting to Rs. 20,000 crore over the next 5 years.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.