ITCBusiness

Complete Analysis of ITC for Long Term Investing Ideas (Part-1)

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Indian Tobacco Corporation Limited, widely known as ITC is considered as one of the safest stock for Long- Term players, incorporated in 1910 (then known as Imperial Tobacco Company of India Ltd) ITC Ltd is one of the oldest Bluechip companies in India. Previously, ITC was known only for its Tobacco business, especially Cigarettes. Now, ITC holds one of the most diverse portfolios with its roots in the Fast Moving Consumer Goods (FMCG) sector and Hospitality sector.

Also Read: Investing Ideas: Complete Analysis for Hindustan Unilever

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Here’s a detailed analysis of ITC!!

1. History:

  • 1910- Imperial Tobacco Corporation of India Ltd was incorporated in a leased office on the Radha Bazar lane in Kolkata.
  • 1925- Company begins its Packaging and printing business. This Business was then focused only on the packaging of cigarettes and Tobacco leaves.
  • 1970- Changed its name to Indian Tobacco Corporation Limited.
  • 1974- Rechanged its name to ITC ltd.
  • 1975- With a purchase of a Welcome hotel in Chennai, ITC entered the hospitality business. TC chose the Hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure, and generate large scale direct and indirect employment. Since then, ITC’s Hotels business has grown to occupy a position of leadership, with over 100 owned and managed properties spread across India under four brands, namely, ITC Hotels – Luxury Collection, WelcomHotels, Fortune Hotels, and WelcomeHeritage.
  • 1979- ITC purchased stakes in Bhadrachalam Paperboards to enter into paperboards and paper business.
  • 1985- Surya Tobacco Corp was incorporated in Nepal as a Joint Venture. This was the first International subsidiary for ITC.
  • 1990- ITC expanded its reach in the Paper business by acquiring Tribeni Tissues Limited.
  • 1990- ITC began exporting Agriculture Commodities via its newly formed Agri-Business Division.
  • 2000- ITC launched a branded Lifestyle retail outlet with the name of Wills sport, which became the title partner of countries’ most premium fashion event, “Wills Lifestyle India Fashion Week.”
  • 2001- Launch of a wide range of FMCG products.
  • 2002- ITC merged Tribeni Tissues Limited with Bhadrachalam paperboards. ITC entered Stationery products with a new subsidiary, “Classmate,” which, over the years, became the largest notebook brand in India. Also, it began with a premium range of stationary under the brand name of Papercraft.
  • 2002- ITC entered into Agarbattis and Matchsticks Business
  • 2005- ITC launched Vivel and Fiama to enter into personnel care segment.

With such an extensive developing History, ITC management has kept developing and expanding in every possible horizon, and it is growing continuously.

2. Nature of Business:

A) Fast Moving Consumer Goods:

  • Cigarettes and Cigars– With more than 100 years of expertise, ITC is the market leader in this segment. ITC’s wide range of brands includes Insignia, India Kings, Classic, Gold Flake, American Club, Navy Cut, Players, Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut, Duke & Royal. With such a wide variety of products, ITC accounts for 81% of cigarette sales in Asia!
  • FoodsITC’s Branded Packaged Foods business is one of the fastest-growing foods businesses in India, driven by the market standing and consumer franchise of its famous brands – Aashirvaad, Bingo! Sunfeast, Fabelle, Sunbean, Yippee! Kitchens of India, B Natural, ITC Master Chef, Farmland, mint-o, Candyman, and Gummo. With these products, ITC can rightly claim to have sold its product to every person in India.
  • Personal Care– ITC’s Personal Care portfolio under the ‘Essenza Di Wills,’ ‘Fiama,’ ‘Vivel,’ ‘Engage,’ ‘Savlon,’ ‘Charmis,’ ‘Shower to Shower,’ ‘Nimyle,’ ‘Nimwash’ and ‘Superia’ brands has received encouraging consumer response and is being progressively extended nationally.
  • Education and Stationery– Beginning with Classmate as a Notebook brand, now it has a complete Stationary Portfolio. Classmate and Papercraft have become a natural extension of the consumer. An accurate understanding of consumer needs helped to create a relevant and comprehensive portfolio satisfying the needs of different sets of consumers.
  • Lifestyle Retailing– Built on the promise of purity, quality, and craftsmanship, WLS offers authentic and real apparel. I am offering a crafted selection of contemporary formals and casual wear. Inspired by the unique art and handicraft indigenous to diverse regions in the country, and combined with Western silhouettes for the Global Indian.
  • Safety Matches- ITC’s range of Safety Matches includes popular brands like Aim, Ship, and Homelite. ITC commenced marketing safety matches sourced from the small-scale sector. The Safety Matches business leverages the core strengths of ITC in marketing and distribution, brand building, supply chain management, and paperboard & packaging to offer Indian consumers high-quality safety matches.
  • Agarbatti and Dhoop- ITC commenced marketing Agarbattis (Incense Sticks) sourced from small-scale and cottage units in 2003. This Business leverages the core strengths of ITC in nation-wide distribution and marketing, brand building, supply chain management, manufacture of high-quality paperboards, and the creation of innovative packaging solutions to offer Indian consumers high-quality Agarbattis & Dhoop. These core strengths aided ITC in becoming the No. 1 Dhoop player in the country. With its participation in the Business, ITC aims to enhance the competitiveness of the small-scale and cottage units through its complementary R&D based product development and strengths in trade marketing and distribution.

B) Hotels:

  • ITC has more than 100 luxury hotels at 70 premium locations.
  • ITC Grand Bharat in Gurugram. ITC Grand Chola in Chennai, ITC Maurya in Delhi, ITC Maratha in Mumbai, ITC Sonar and ITC Royal Bengal in Kolkata, ITC Grand Central in Mumbai, ITC Windsor & ITC Gardenia in Bengaluru, ITC Kakatiya and ITC Kohinoor in Hyderabad and ITC Mughal in Agra, ITC Rajputana in Jaipur and ITC Grand Goa Resort and Spa in Goa are few in the list.
ITC
ITC

C) Paperboards & Specialty Packaging:

  • Not known to many, ITC takes great pride in servicing a broad cross-section of industry requirements – from cigarette papers and Components to FMCG cartons, from electrical insulation papers to Bio-based Barrier Coated Board, from decorative laminate base to writing and printing papers and much more.
  • Virgin Boards, Recycled Boards, Coated Boards, Biodegradable Coated Boards, and Graphic boards; all packaging needs have one Solution, i.e., ITC.
  • Its client list includes several well-known national and international companies like Nokia, Colgate Palmolive, Pernod Ricard, Diageo, British American Tobacco, Philip Morris International, Agio Cigars, UB Group, Tata Tetley, Tata Tea, Reckitt Benckiser, Radico Khaitan, Akbar Brothers, Surya Nepal, VST Industries, etc.

D) Agri-Division: ITC’s Agri-Business is the country’s second-largest exporter of Agri-Products. It currently focuses on exports and domestic trading of:

  • Feed Ingredients – Soyameal
  • Food Grains – Wheat & Wheat Flour, Rice, Pulses, Barley & Maize
  • Marine Products – Shrimps and Prawns
  • Processed Fruits – Fruit Purees/Concentrates, IQF/Frozen Fruits, Organic Fruit Products
  • Coffee

E) Information Technology:

  • ITC Infotech provides business-friendly solutions to help clients succeed and be future-ready by seamlessly bringing together digital expertise, strong industry-specific alliances, and the unique ability to leverage deep domain expertise from ITC Group businesses.
  • ITC provides technology solutions and services to enterprises across industries such as Banking & Financial Services, Healthcare, Manufacturing, Consumer Goods, Travel, and Hospitality, through a combination of traditional and newer business models.

Also Read: Beginner’s Guide: Technical Analysis; Support and Resistance Levels

ITC

This article covers the business model of ITC. A single share of ITC is well diversified. Due to such vast Business and its reach, ITC is considered as a Long-Term share. Fundamental and Technical Analysis will be covered in further articles.

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