Premiumisation to fuel ITC's margin expansion

ITC’s investor meeting highlighted the growth imperative led by broad-based growth across business segments enabled by 1) Innovation, 2) Efficient and agile supply chain, 3) a Digital/ smart ecosystem, and 4) Cost optimization. ITC continues to innovate and improve GTM (go-to-market) initiatives even as cigarette business growth seems to be a function of taxation policy, according to a Prabhudas Lilladher report.

ITC aims for 80-100bps margin expansion in the New FMCG business led by premiumisation, scale and cost optimisation, it says. The hotel business is in for solid growth with considerable scope to grow and increase ARR (annual recurring revenue) /occupancy. "We found Food Tech and Nicotine derivative exports to be two exciting businesses with the scope to create strong moats in the long term. We believe that FMCG and IT Services will create massive value for shareholders. We maintain a positive innovation and digitisation-led strategy with sustained growth and a 100 per cent jump in ROCE (return on capital employed) of non-cigarette businesses and overall Rs 9,470 crore cash generation in the last 10 years," says the report.

Read Prabhudas Lilladher the report here.