ITC : Value Stock or Growth Stock? Parimal Ade

Summary

The video script discusses the recent performance and ratings of ITC, an Indian conglomerate. The focus is on ITC's transition from being primarily a cigarette business to diversifying into other sectors like FMCG, agri-business, hotels, paperboards, and packaging. The speaker highlights ITC's current stock target price, which is around 520-530, and debates whether ITC should be considered a value stock or a growth stock. The discussion also touches on the company's earnings, revenue growth, and the potential impact of government regulations on the cigarette business. The speaker suggests that investors should monitor ITC's performance in its non-cigarette businesses and its ability to sustain growth and profitability. The video concludes with an invitation for viewers to visit the speaker's website for investment advice and portfolio management services.

Takeaways

• 📉 The ITC stock is currently rated by institutional investors and brokers, who are reassessing its value, with a target price of around 520-530 being set for the stock.
• 🚬 ITC's cigarette business is identified as its largest vertical, but there is a noted dependency reduction on this business, which is a key consideration for its future valuation.
• 🌱 The focus is shifting towards other growth businesses within ITC, such as FMCG, agri-business, paperboards & packaging, and hotel businesses, which are seen as creating good value.
• 📈 ITC's stock has shown a significant premium over the last few years compared to its peers, indicating a re-rating of the company in the market.
• 💹 The report suggests that ITC's hotel business has been under stress, and there is a detailed focus on this aspect, with an implied valuation of ₹15 for the hotel business, which is considered at risk.
• 📊 The median PE ratios for ITC over 1, 3, and 5 years are discussed, showing an increase from 20 to 29, reflecting the market's perception of the company's growth.
• 🔍 Institutional investors are taking a different view, with some focusing on the reduced dependency on the cigarette business and the potential of other businesses to drive future revenue.
• 🌐 Global blue-chip investors and research houses have completely re-rated ITC, focusing on the potential of its non-cigarette businesses and their growth margins.
• ⏳ There is a debate on whether ITC should be considered a value stock or a growth stock, with some investors believing that the market has already priced in the growth potential.
• 🤔 The uncertainty in the cigarette business due to government regulations and interventions is a concern for investors, which may affect the stock price.
• 📚 The speaker suggests visiting their website for investment advice, portfolio management, and financial planning services, offering a promo code for discounts and a free learning course on stock market investment.

Q & A

What is the current target price for ITC's stock as mentioned in the report?

The report mentions a target price of around 520-530 for ITC's stock.

What is the main business segment of ITC that is being discussed in the report?

The main business segment discussed in the report is the hotel business of ITC.

What is the valuation given to the hotel business of ITC in the report?

The valuation given to the hotel business of ITC in the report is ₹15, which is considered a risk.

What is the current market perception of ITC's stock according to the report?

The current market perception, as per the report, is that ITC's stock has been completely re-rated and is seen as a value stock rather than a growth stock.

What is the dependency of ITC's business on the cigarette business as per the report?

The report suggests that the dependency on the cigarette business is decreasing, with other businesses like FMCG, agri-business, paperboards, and packaging showing good value creation.

What is the view of institutional investors regarding ITC's cigarette business?

Institutional investors view the cigarette business as a significant contributor to ITC but express concerns about the decreasing dependency and the uncertainties associated with government regulations and interventions.

What are the growth engines available to ITC apart from the cigarette business?

Apart from the cigarette business, ITC has growth engines in FMCG, agri-business, hotel business, and paperboards and packaging.

What is the three-year average median PE ratio for ITC as per the report?

The three-year average median PE ratio for ITC, as mentioned in the report, is around 20.

What is the current sentiment among investors regarding the valuation of ITC's different businesses?

The current sentiment among investors is that the valuation of ITC's different businesses, especially the non-cigarette businesses, is quite good and offers a good revenue share.

What is the potential impact of environmental and social governance on ITC's business?

The report suggests that there are no significant issues with environmental and social governance for ITC, but there are some concerns raised by investors regarding these parameters.

What are the future growth prospects for ITC as discussed in the report?

The report discusses the potential for growth in ITC's non-cigarette businesses, such as FMCG, agri-business, hotel business, and paperboards and packaging, which are expected to drive future growth.

What advice is given to investors regarding ITC's stock in the report?

The report advises investors to consider the different growth engines within ITC and to focus on the valuation of the non-cigarette businesses. It also suggests that investors should monitor the company's management of margins and digital initiatives.