ITC hosted its first ever analyst meet on December 14, 2021. In the Analyst meet the company was represented by its Chairman & Managing Director Mr. Sanjiv Puri
Key takeaways of the meeting
Company indicated that it will look for growth triggers in all its business verticals. Company will focus on future-facing categories and drive premiumisation with innovations driving affordability in premium categories.
The company will be focusing on Mergers and Acquisitions (M&A) going forward.
Company is planning to invest Rs 10,000 crore over the next three years to create growth vectors. 35-40% of the investment would go towards FMCG capacity expansion, while 25-30% towards ITC Paperboards, about 10% of the capital would be spent on completing its major hotel projects and the rest of the sum on building digital capabilities.
Management indicated the company is open to look at a demerger of FMCG business or a separate listing of IT business to unlock further potential.
The company will be increasing its focus on exports in the Fast Moving Consumer Goods (FMCG) segment. The company has also indicated that it will be stressing on the personal care segment which is a high potential segment for ITC.
The e-commerce channel contributes 7% of overall sales and 14% contribution in personal care.
Company's FMCG Core brands have displayed strong, ahead-of-industry growth in the last 10 years. ITC FMCG business grew at 10 year CAGR of 12.7% compared to FMCG peers at 10.3%. It is one of the fastest growing FMCG businesses in India.
For H1 FY22 FMCG business was able to maintain EBITDA margin despite inflationary headwinds.
The company has done agreements with Interglobe Aviation and Inox Leisure in its beverage segment that is expected to benefit its products portfolio.
Company believe branded packaged foods in India is poised for growth, driven by consumers seeking Safe and Hygienic food products, rising disposable income and growth of ecommerce
Management plans to maximize cigarette potential within the tobacco basket. Cigarette consumption stands at just 8% of tobacco consumed. The cigarette portfolio is future-ready with in-house technology benefits and the launch of more variants/formats.
ITC expects margin improvement to continue over the longer term with industry-leading margins across categories, led by manufacturing cost efficiencies, mix improvement and accretive acquisitions.
The company will continue to focus on digital and is undertaking various initiatives to make the company operations more efficient and agile.
In the aftermath of the pandemic, the focus among the consumers have now shifted to branded products. Company has also gained from the launch of new products and the volumes have also gone up.
In the hotel business, the company has indicated that it will be working on an asset light model. It will also be working on improving margins. Management further added that once its hotels business revives, they would restructure the business.
Company amended its dividend distribution policy. Shareholders can expect a payout of 80-85% of annual PAT in the medium term.
The company has witnessed cumulative free cash flow worth Rs 31,000 crore in the 3 year period.
Company Portfolio continues to evolve; it now derives 11% of Volumes from New Products. Management is looking for market opportunity based First to Market products.
Company intends to further expand its foot-print globally through exports. It currently exports to 58 countries.
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