Stock View : ITC, A Consistent Wealth Creator

Stock View : ITC, A Consistent Wealth Creator

 

BIG BOOST as Co achieves break-even in non-cigarette FMCG business a year ahead of analysts’ expectations

Cigarettes-to-hotels major ITC Ltd has been a consistent performer year on year building investor wealth. Net profit for the full fiscal (2013-14) rose 18.5% to Rs 8,785.21 crore, while net sales grew 11.5% to Rs 32,882.56 crore. The Kolkata-based conglomerate said it achieved break-even of non-cigarette FMCG business in 2013-14, a year ahead of analyst expectations. This business - comprising packaged food, personal care, lifestyle retail and stationery products business—reported a profit of Rs 21.82 crore for the fiscal against a loss of Rs 81.25 crore in the previous fiscal. ITC chairman YC Deveshwar had set a target to make the non-cigarette FMCG business profitable before his retirement, which is due in 2017. The company has been betting on this business to de-risk dependence on its flagship cigarette business. Analysts say break-even of this business will boost ITC’s profit margins, as the cigarette business has been generating the huge investments required in the personal care and packaged food businesses until now. The company’s non-cigarette FMCG business reported a 17% jump in net sales for the full fiscal at Rs 8,099.21 crore. The cigarette business sales grew by more than 10% to Rs 15,458.05 crore, which analysts attribute to more than a 15% increase in cigarette prices during the fiscal.

The company has the inherent capability to absorb all increase in cost by passing it to the customer thus maintaining its profit margins.

Invest in this stock as a long term capital preserver and give you consistent growth.

HAPPY INVESTING.