Financial Analysis - ITC Group

Presented by:-

Sachin Soni

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INTRODUCTION

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• Incorporated on August 24, 1910, completes 100 years on 24th August, 2010.

• India’s premier privates sector companies with a turnover of US $3Billion

• Positioning of ITC “TOUCHING YOUR LIFE EVERYDAY”

• Over 26,000 people at more than 60 locations across India and is listed on Forbes 2000.

• India's second largest exporter of agricultural products.

• Second largest Hotel chain in India.

• Market leader in the Indian Paperboard and Packaging industry.

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Hotel

Cigarettes

Incense Sticks

Personal Care

Safety Matches

Agricultural Industry

Information Technology

Paperboards

Packaged Foods

Stationery

Branded Apparel

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HISTORY

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• 24 Aug1910 – ITC incorporated under the name of 'Imperial Tobacco Company of India Limited'.

• 1925 – ITC’s Packaging & Printing Business Division was set up as a strategic backward integration for ITC’s Cigarettes business.

• 1974 – The Company's ownership progressively Indianised, and the name of the Company was changed to ITC Limited (Indian Tobacco Company).

• 1975 – The Co. launched its HOTEL BUSINESS which was named ‘ITC-Welcome group Hotel Chola’.

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• 1979 – ITC entered the Paperboards Business, which today has become the market leader in India.

• 1990 – International Business Division (IBD) for export of agri-commodities.

• 2000 – Lifestyle Retailing Business with Wills Sport range of international quality relaxed wear for men and women.

• 2000 – ITC Infotech India Ltd.• 2001 – ITC entered in Food Business with launch of

‘Kitchen Of India’ ready-to-eat Indian gourmet dishes.• 2002 – Started FMCG business.

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ANALYSIS

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Ratio analysis is the process of determining and interpreting numerical relationship based on financial statements. It is the technique of interpretation of financial statements with the help of accounting ratios derived from the balance sheet and profit and loss account.

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2009 2010 2011 2012 20130

5

10

15

20

25

17.76 19.120.59

22.65 23.55

ROA

2009 2010 2011 2012 201305

10152025303540

25.3129.22

33.23 35.47 36.12

ROE

2009 2010 2011 2012 20130

10

20

30

40

50

60

35.1140.89

46.13 49.04 49.72

Return on invested capital

2009 2010 2011 2012 201305

101520253035

21.5424.78

28.13 28.7932.92

PE ratio

Overall performance

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2009 2010 2011 2012 201327

28

29

30

31

32

33

34

29.1729.74

30.97

32.77 32.88

Gross profit margin

2009 2010 2011 2012 201319.5

2020.5

2121.5

2222.5

2323.5

2424.5

21.18 21.3

22.91

23.97 24.05

Net profit margin

Profitability

2009 2010 2011 2012 20130

2

4

6

8

10

4.295.31

6.457.88

9.39

Earnings per share

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Investment utilization

2009 2010 2011 2012 20131.18

1.21.221.241.261.28

1.31.321.341.36

1.261.24

1.271.29

1.34

Asset turnover

2009 2010 2011 2012 20132.12.22.32.42.52.62.72.8

2.37 2.33

2.49

2.622.71

Capital intensity

2009 2010 2011 2012 201301234567

4.53

6.536.05 6.04

5.26

Invested capital turnover

2009 2010 2011 2012 20130

20

40

60

80

100

120102.27

67.6383.61

91.83101.88

Interest coverage

Investment utilization

2009 2010 2011 2012 20130

1020304050607080

68.21 63.5858.14 56.52 53.04

Days inventory

2009 2010 2011 2012 20130

0.5

1

1.5

2

2.52.15

1.55 1.54 1.58 1.7

Current ratio

2009 2010 2011 2012 20130

0.20.40.60.8

11.21.4

1.170.99 0.92 0.97

1.06

Quick ratio

2009 2010 2011 2012 20130

2

4

6

8

10

12 11.27 10.8 10.419.68 9.3

Days receivable

Financial Condition

2009 2010 2011 2012 20130

0.002

0.004

0.006

0.008

0.01

0.0120.01 0.01 0.01

0.0040.003

Debt-Equity ratio

2009 2010 2011 2012 20130

50

100

150

200

250

300264.41

93.9 107.29 115.19 124.56

Times interest earned

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2009 2010 2011 2012 20130

0.51

1.52

2.53

3.54

2

3.8

2.451.98

1.7

Dividend yield

2009 2010 2011 2012 20130

20

40

60

80

100

120

50.06

109.63

80.2466.35 65.42

Dividend payout ratio

Dividend policy

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COMPARISON

ITC, HUL & IHCL

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ITC, HUL & IHCL

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CONCLUSION

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• Major sectors of ITC are strong – FMCG major source of revenue.

• Strong cash generation and management – High ROE

• Diversification and market share – Different product ranges, good market share in operating areas

• Able management – strategies proved to be good

• Low risk stock – being a high capital company operating with high market share in stable markets

• ITC is expected to continue in its path of growth and diversification

CONCLUSION

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