ITC - Leveraging Institutional Strengths To Build Multiple New Growth Engines: Systematix

Systematix Research Report

We attended ITC Ltd.’s investor meet and came back with the following key takeaways –

1. cigarettes should continue to deliver steady volume growth and share gains vs both the legal and illicit trade given expectations of a stable taxation regime and portfolio fortification,

2. Fmcg business should continue to grow ahead of the market with a refreshed personal care portfolio, multiple adjacencies being built and new vectors being created in foods in addition to a 100bps annual margin expansion,

3. distribution muscle is being further strengthened across both traditional (three times coverage in five years) and alternate channels (share up to 25%),

4. agribusiness is witnessing a combination of premiumization via initiatives like nicotine manufacturing and back-end re-engineering through ITCMAARS,

5. paper business should now see a cyclical recovery led by foray into sustainable packaging solutions,

6. hotels should see continued business momentum with a strong pipeline, asset right strategy, strong brand equity and digitization/capital productivity initiatives.

Overall, we see the company leveraging its institutional, sourcing and distribution strengths to build multiple new growth engines for the future with a visible step-up in innovation, digitisation and productivity spends.

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