ITC FINANCIAL MODEL

BY
SIMARPREET SINGH NAYYAR(24021241180
TANISHQ BHELONDE(24021241196)
DURGA GANTA KARTHIK(24021241065)
Income Statement - ITC

(All figures in INR crores) Historical

Year ending 2018 A 2019 A 2020 A 2021 A

Income Statement
Net Revenue ₹ 44,329 ₹ 45,784 ₹ 46,806 ₹ 48,523
Revenue Growth 3.28% 2.23% 3.67%
COGS ₹ 15,855 ₹ 17,420 ₹ 17,345 ₹ 20,131
COGS % Sales 35.77% 38.05% 37.06% 41.49%
Gross Profit ₹ 28,474 ₹ 28,364 ₹ 29,461 ₹ 28,392
Gross margin 64.23% 61.95% 62.94% 58.51%
Employee Expenses ₹ 3,761 ₹ 4,178 ₹ 4,296 ₹ 4,463
% margin 8.48% 9.13% 9.18% 9.20%
SG&A ₹ 8,500 ₹ 6,152 ₹ 6,362 ₹ 7,270
S&G % Sales 19.17% 13.44% 13.59% 14.98%
EBITDA ₹ 16,213 ₹ 18,034 ₹ 18,803 ₹ 16,658
EBITDA Margin 36.57% 39.39% 40.17% 34.33%
D&A ₹ 1,236 ₹ 1,397 ₹ 1,645 ₹ 1,646
D&A % Sales 2.79% 3.05% 3.51% 3.39%
EBIT (Operating Profit) ₹ 14,977 ₹ 16,637 ₹ 17,158 ₹ 15,012
EBIT Margin 33.79% 36.34% 36.66% 30.94%
Non Operating Income ₹ 1,832 ₹ 2,174 ₹ 2,598 ₹ 2,633
Non Operating Income % Sales 4.13% 4.75% 5.55% 5.43%
Interest Expense ₹ 90 ₹ 45 ₹ 55 ₹ 45
Interest % Sales 0.20% 0.10% 0.12% 0.09%
EBT ₹ 16,719 ₹ 18,766 ₹ 19,702 ₹ 17,600
EBT Margin 37.72% 40.99% 42.09% 36.27%
Exceptional Expense / (Income) including Foreign Exchange ₹ 413 ₹0 ₹(132) ₹0
EBT After Exceptionals and Foreign Exchange ₹ 17,132 ₹ 18,766 ₹ 19,569 ₹ 17,600
Tax ₹ 5,916 ₹ 6,314 ₹ 4,442 ₹ 4,555
Effective Tax Rate 35.39% 33.65% 22.55% 25.88%
EAT ₹ 11,215 ₹ 12,452 ₹ 15,128 ₹ 13,045
Share of Profit of JVs and Associates ₹8 ₹ 12 ₹8 ₹(7)
Net Profit ₹ 11,223 ₹ 12,464 ₹ 15,136 ₹ 13,038
Net Profit Margin 25.32% 27.22% 32.34% 26.87%
Attributable to Non Controlling Interest ₹ 221 ₹ 244 ₹ 287 ₹ 222
Attributable to Common Shareholders ₹ 11,001 ₹ 12,220 ₹ 14,849 ₹ 12,817

No. of Equity Shares (in crores) 1217 1223 1227 1230

Earning per Share ₹ 9.3 ₹ 10.3 ₹ 12.5 ₹ 10.7

EPS Growth % 11.2% 21.1% -14.2%

Dividend Per Share ₹ 4.9 ₹ 5.3 ₹ 5.9 ₹ 15.4

Dividend Payout Ratio 52.8% 51.8% 47.7% 143.5%

Retained Earning 47.2% 48.2% 52.3% -43.5%

 Forecast
2022 A 2023 A 2024 E 2025 E 2026 E 2027 E 2028 E

₹ 59,745 ₹ 70,251 ₹ 83,608 ₹ 100,298 ₹ 121,358 ₹ 148,195 ₹ 182,728

23.13% 17.58% 19.01% 19.96% 21.00% 22.11% 23.30%
₹ 26,385 ₹ 30,910 ₹ 36,788 ₹ 44,131 ₹ 53,398 ₹ 65,206 ₹ 80,400
44.16% 44.00% 44.00% 44.00% 44.00% 44.00% 44.00%
₹ 33,360 ₹ 39,341 ₹ 46,821 ₹ 56,167 ₹ 67,961 ₹ 82,989 ₹ 102,328
55.84% 56.00% 56.00% 56.00% 56.00% 56.00% 56.00%
₹ 4,891 ₹ 5,620 ₹ 6,689 ₹ 8,024 ₹ 9,709 ₹ 11,856 ₹ 14,618
8.19% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
₹ 8,274 ₹ 8,779 ₹ 13,377 ₹ 16,048 ₹ 19,417 ₹ 23,711 ₹ 29,236
13.85% 16.00% 16.00% 16.00% 16.00% 16.00% 16.00%
₹ 20,196 ₹ 24,941 ₹ 26,755 ₹ 32,095 ₹ 38,835 ₹ 47,422 ₹ 58,473
33.80% 35.50% 32.00% 32.00% 32.00% 32.00% 32.00%
₹ 1,732 ₹ 2,536 ₹ 2,926 ₹ 3,912 ₹ 4,369 ₹ 5,335 ₹ 6,578
2.90% 3.61% 3.50% 3.90% 3.60% 3.60% 3.60%
₹ 18,463 ₹ 22,405 ₹ 23,828 ₹ 28,184 ₹ 34,466 ₹ 42,087 ₹ 51,895
30.90% 31.89% 28.50% 28.10% 28.40% 28.40% 28.40%
₹ 1,836 ₹ 2,810 ₹ 3,344 ₹ 4,012 ₹ 4,854 ₹ 5,928 ₹ 7,309
3.07% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
₹ 39 ₹ 67 83 105 43 53 70
0.07% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
₹ 20,260 ₹ 25,149 ₹ 27,090 ₹ 32,090 ₹ 39,277 ₹ 47,962 ₹ 59,134
33.91% 35.80% 32.40% 32.00% 32.36% 32.36% 32.36%
₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0
₹ 20,260 ₹ 25,149 ₹ 27,090 ₹ 32,090 ₹ 39,277 ₹ 47,962 ₹ 59,134
₹ 5,237 ₹ 6,403 ₹ 6,772 ₹ 8,023 ₹ 9,819 ₹ 11,991 ₹ 14,783
25.85% 25% 25% 25% 25% 25% 25%
₹ 15,023 ₹ 18,746 ₹ 20,317 ₹ 24,068 ₹ 29,458 ₹ 35,972 ₹ 44,350
₹ 17 ₹8 ₹8 ₹7 ₹7 ₹9 ₹8
₹ 15,040 ₹ 18,753 ₹ 20,325 ₹ 24,075 ₹ 29,464 ₹ 35,981 ₹ 44,358
25.17% 26.69% 24.31% 24.00% 24.28% 24.28% 24.28%
₹ 260 ₹ 250 ₹ 250 ₹ 250 ₹ 250 ₹ 250 ₹ 250
₹ 14,780 ₹ 18,503 ₹ 20,075 ₹ 23,825 ₹ 29,214 ₹ 35,731 ₹ 44,108

1232 1278 1186 1203 1260 1317 1390

₹ 12.4 ₹ 14.5 ₹ 16.9 ₹ 19.8 ₹ 23.2 ₹ 27.1 ₹ 31.7

15.6% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0%

₹ 11.2 ₹ 8.6 ₹ 14.8 ₹ 11.6 ₹ 8.7 ₹ 9.0 ₹ 9.4

90.5% 59.7% 87.2% 58.7% 37.6% 33.3% 29.6%

9.5% 40.3% 12.8% 41.3% 62.4% 66.7% 70.4%

Balance Sheet - ITC

(All figures in INR crores) Historical F

Year ending 2019 A 2020 A 2021 A 2022 A 2023 A 2024 E

Balance Sheet
Current Assets
Cash & Cash Equivalents ₹ 4,442 ₹ 2,900 ₹ 4,152 ₹ 7,277 ₹ 4,659 ₹ 4,654
Inventory ₹ 7,495 ₹ 7,860 ₹ 8,879 ₹ 10,397 ₹ 10,864 ₹ 12,879
Accounts Receivables ₹ 1,505 ₹ 975 ₹ 846 ₹ 820 ₹ 1,386 ₹ 1,635
Other Investments ₹ 10,569 ₹ 13,348 ₹ 17,948 ₹ 14,846 ₹ 12,264 ₹ 13,795
Other Assets ₹ 2,748 ₹ 2,353 ₹ 2,838 ₹ 2,588 ₹ 3,988 ₹ 2,903
Total Current Assets ₹ 26,759 ₹ 27,435 ₹ 34,663 ₹ 35,928 ₹ 33,161 ₹ 35,867

Non Current Assets

PP&E (Including Intangibles) ₹ 16,321 ₹ 19,172 ₹ 21,511 ₹ 22,519 ₹ 23,452 ₹ 25,542
CWIP and Intangibles under development ₹ 5,508 ₹ 4,136 ₹ 3,256 ₹ 4,011 ₹ 3,226 ₹ 4,028
Long Term Investments ₹ 17,744 ₹ 22,137 ₹ 10,630 ₹ 11,196 ₹ 20,272 ₹ 23,041
Goodwill ₹ 203 ₹ 203 ₹ 203 ₹ 780 ₹ 780 ₹ 780
Other Non Current Assets ₹ 4,379 ₹ 4,845 ₹ 2,177 ₹ 1,493 ₹ 2,993 ₹ 3,177
Total Non Current Assets ₹ 44,155 ₹ 50,492 ₹ 37,777 ₹ 39,999 ₹ 50,722 ₹ 56,568

Total Assets ₹ 70,914 ₹ 77,927 ₹ 72,440 ₹ 75,927 ₹ 83,883 ₹ 92,435

Current Liabilities
Short Term Borrowings ₹ 17 ₹2 ₹ 65 ₹ 58 ₹ 51 ₹ 39
Payables ₹ 3,496 ₹ 3,510 ₹ 3,630 ₹ 4,319 ₹ 4,417 ₹ 4,417
Other Short Term Liabilities ₹ 5,737 ₹ 6,501 ₹ 5,865 ₹ 6,313 ₹ 7,696 ₹ 6,422
Total Current Liabilities ₹ 9,250 ₹ 10,012 ₹ 9,560 ₹ 10,690 ₹ 12,164 ₹ 10,878

Non Current Liabilities

Long Term Borrowings ₹ 12 ₹8 ₹ 210 ₹ 213 ₹ 199 ₹ 211
Other Long Term Liabilities ₹ 2,183 ₹ 2,294 ₹ 1,947 ₹ 2,223 ₹ 1,212 ₹ 1,972
Total Non-Current Liabilities ₹ 2,194 ₹ 2,302 ₹ 2,157 ₹ 2,435 ₹ 1,411 ₹ 2,182

Total Liabilities ₹ 11,444 ₹ 12,314 ₹ 11,716 ₹ 13,125 ₹ 13,575 ₹ 13,060

Equity
Equity Share Capital ₹ 1,220 ₹ 1,226 ₹ 1,229 ₹ 1,232 ₹ 1,232 ₹ 1,232
Other Equity ₹ 57,915 ₹ 64,044 ₹ 59,117 ₹ 61,224 ₹ 68,710 ₹ 77,788
Non Controlling Interest ₹ 334 ₹ 343 ₹ 377 ₹ 347 ₹ 366 ₹ 354
Total Equity ₹ 59,470 ₹ 65,613 ₹ 60,723 ₹ 62,802 ₹ 70,308 ₹ 79,374

Total Liabilites and Equity ₹ 70,914 ₹ 77,927 ₹ 72,440 ₹ 75,927 ₹ 83,883 ₹ 92,435
 Forecast
2025 E 2026 E 2027 E 2028 E

₹ 19,751 ₹ 16,847 ₹ 60,589 ₹ 85,846

₹ 16,350 ₹ 20,840 ₹ 25,216 ₹ 30,792
₹ 2,229 ₹ 2,697 ₹ 3,293 ₹ 11,491
₹ 14,440 ₹ 14,659 ₹ 14,001 ₹ 13,832
₹ 2,934 ₹ 3,050 ₹ 3,092 ₹ 3,193
₹ 55,704 ₹ 58,093 ₹ 106,191 ₹ 145,153

₹ 27,847 ₹ 30,957 ₹ 34,993 ₹ 39,867

₹ 3,731 ₹ 3,650 ₹ 3,729 ₹ 3,673
₹ 13,644 ₹ 25,001 ₹ 24,395 ₹ 18,116
₹ 780 ₹ 780 ₹ 780 ₹ 780
₹ 2,937 ₹ 2,555 ₹ 2,631 ₹ 2,859
₹ 48,939 ₹ 62,943 ₹ 66,528 ₹ 65,294

₹ 104,643 ₹ 121,036 ₹ 172,720 ₹ 210,448

₹ 43 ₹ 51 ₹ 48 ₹ 46
₹ 4,417 ₹ 4,417 ₹ 4,417 ₹ 4,417
₹ 6,559 ₹ 6,571 ₹ 6,712 ₹ 6,792
₹ 11,019 ₹ 11,039 ₹ 11,178 ₹ 11,256

₹ 249 ₹ 293 ₹ 363 ₹ 392

₹ 1,930 ₹ 1,857 ₹ 1,839 ₹ 1,762
₹ 2,178 ₹ 2,150 ₹ 2,202 ₹ 2,154

₹ 13,198 ₹ 13,189 ₹ 13,379 ₹ 13,409

₹ 1,232 ₹ 1,232 ₹ 1,232 ₹ 1,232

₹ 89,855 ₹ 106,254 ₹ 107,749 ₹ 146,657
₹ 358 ₹ 360 ₹ 357 ₹ 359
₹ 91,444 ₹ 107,846 ₹ 109,338 ₹ 148,248

₹ 104,643 ₹ 121,036 ₹ 122,718 ₹ 161,658

Cash Flow Statement- ITC

(All figures in INR crores) Historical Forecast

Year ending 2019 A 2020 A 2021 A 2022 A 2023 A 2024 E 2025 E 2026 E 2027 E 2028 E

Cash Flow Statement

Cash Flow from Operations
Net Income ₹ 12,464 ₹ 15,136 ₹ 13,038 ₹ 15,040 ₹ 18,753 ₹ 20,325 ₹ 24,075 ₹ 29,464 ₹ 35,981 ₹ 44,358
Add:Depreciation & Amortization ₹ 1,397 ₹ 1,645 ₹ 1,646 ₹ 1,732 ₹ 2,459 ₹ 2,926 ₹ 3,912 ₹ 4,369 ₹ 5,335 ₹ 6,578
Decrease / (Increase) in Working Capital Assets ₹ 1,256 ₹ 1,854 ₹ 4,956 ₹(3,378) ₹(616) ₹ 695 ₹ 1,270 ₹ 803 ₹(19) ₹ 8,129
(Decrease) / Increase in Working Capital Liabilities ₹ 10 ₹ 13 ₹ 120 ₹ 689 ₹ 99 ₹0 ₹0 ₹0 ₹0 ₹0
Cash Flow from Operations ₹ 15,126 ₹ 18,648 ₹ 19,760 ₹ 14,083 ₹ 20,695 ₹ 23,947 ₹ 29,256 ₹ 34,636 ₹ 41,297 ₹ 59,065

Cash Flow from Investing

Capital Expenditure (including intangibles) ₹(3,169) ₹(2,441) ₹(1,837) ₹(2,142) ₹(3,513) ₹(4,180) ₹(6,018) ₹(7,281) ₹(8,892) ₹(10,964)
Purchase of Goodwill ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0
Proceeds from Disposals ₹ 28 ₹ 27 ₹3 ₹ 133 ₹ 48 ₹ 53 ₹ 59 ₹ 73 ₹ 58 ₹ 61
(Increase) / Decrease in CWIP and Developmental Intangibles ₹ 190 ₹ 4,393 ₹(11,507) ₹ 566 ₹ 9,076 ₹ 2,769 ₹(9,397) ₹ 11,357 ₹(606) ₹(6,279)
(Increase) / Decrease in Non Current Assets ₹ 1,661 ₹ 521 ₹(2,146) ₹ 3,451 ₹ 3,942 ₹ 1,423 ₹ 4,356 ₹ 6,282 ₹ 7,622 ₹ 9,807
Investments #VALUE! ₹ 4,393 ₹(11,507) ₹ 566 ₹ 9,076 ₹ 2,769 ₹(9,397) ₹ 11,357 ₹(606) ₹(6,279)
Other ₹(1,106) ₹(1,570) ₹(819) ₹(657) ₹(1,038) ₹(1,021) ₹(884) ₹(900) ₹(961) ₹(941)
Cash Flow from Investing ₹(7,114) ₹(5,546) ₹(6,174) ₹ 5,740 ₹(2,238) ₹ 1,813 ₹(21,281) ₹ 20,888 ₹(3,385) ₹(14,595)

Cash Flow from Financing

Long Term Debt (Net) ₹2 ₹(3) ₹ 202 ₹3 ₹(14) ₹ 12 ₹ 38 ₹ 44 ₹ 70 ₹ 29
Short Term Debt / Revolver (Net) ₹(10) ₹(15) ₹ 63 ₹(7) ₹(7) ₹(12) ₹4 ₹8 ₹(3) ₹(2)
Equity Share Capital ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0
Increase / (Decrease) in other long term liabilities ₹ 346 ₹ 528 ₹(707) ₹(286) ₹ 1,132 ₹(556) ₹ 22 ₹(79) ₹ 46 ₹(1,759)
Other Comprehensive Income ₹ 326 ₹(1,470) ₹ 207 ₹ 81 ₹ 150 ₹ 150 ₹ 200 ₹ 200 ₹ 250 ₹ 250
Non Controlling Interests ₹6 ₹9 ₹ 34 ₹(31) ₹ 19 ₹(13) ₹4 ₹3 ₹(3) ₹2
Dividends ₹(5,952) ₹(6,519) ₹(7,302) ₹(18,881) ₹(13,788) ₹(10,488) ₹(11,396) ₹(12,371) ₹(13,385) ₹(12,286)
Other ₹0 ₹ 226 ₹(406) ₹ 586 ₹ 572 ₹ 245 ₹ 249 ₹ 413 ₹ 370 ₹ 319
Cash Flow from Financing ₹(6,221) ₹(6,869) ₹(8,181) ₹(18,634) ₹(13,580) ₹(10,663) ₹(10,878) ₹(11,782) ₹(12,656) ₹(13,446)

Total Cash Flow ₹ 1,791 ₹ 6,233 ₹ 5,405 ₹ 1,189 ₹ 4,877 ₹ 15,096 ₹(2,903) ₹ 43,742 ₹ 25,257 ₹ 31,024
Beginning Cash Flow ₹ 4,442 ₹ 2,900 ₹ 4,152 ₹ 7,277 ₹ 4,659 ₹ 4,654 ₹ 19,751 ₹ 16,847 ₹ 60,589 ₹ 85,846
Ending Cash Flow ₹ 6,233 ₹ 9,133 ₹ 9,557 ₹ 8,467 ₹ 9,536 ₹ 19,751 ₹ 16,847 ₹ 60,589 ₹ 85,846 ₹ 116,870
Ratio Analysis - ITC

(All figures in INR crores) Historical Forecast

Year ending 2018 A 2019 A 2020 A 2021 A 2022 A 2023 A

Sales Growth - 3.28% 2.23% 3.67% 23.13% 17.58%

EBITDA Growth - 11.23% 4.26% -11.41% 21.24% 23.50%
EBIT Growth - 11.09% 3.13% -12.51% 22.99% 21.35%
Net Profit Growth - 11.06% 21.44% -13.86% 15.35% 24.69%
Dividend Growth - 9.54% 12.00% 158.59% -26.97% -23.93%

Gross Margin 64.23% 61.95% 62.94% 58.51% 55.84% 56.00%

EBITDA Margin 36.57% 39.39% 40.17% 34.33% 33.80% 35.50%
EBIT Margin 33.79% 36.34% 36.66% 30.94% 30.90% 31.89%
EBT Margin 37.72% 40.99% 42.09% 36.27% 33.91% 35.80%
Net Profit Margin 25.32% 27.22% 32.34% 26.87% 25.17% 26.69%

SalesExpenses%Sales 19.17% 13.44% 13.59% 14.98% 13.85% 16.00%

Depreciation%Sales 2.79% 3.05% 3.51% 3.39% 2.90% 3.61%
OperatingIncome%Sales 33.79% 36.34% 36.66% 30.94% 30.90% 31.89%

Retained Earnings % 47.20% 48.23% 52.30% -43.46% 9.54% 40.34%

Return on Equity % 18.98% 18.98% 19.10% 25.08% 20.88% 21.50%
Self Sustained Growth Rate 8.96% 9.15% 9.99% -10.90% 1.99% 8.67%
Interest Coverage Ratio 166.58x 366.30x 313.80x 336.75x 469.08x 335.84x

Debtor Turnover Ratio 16.20x 11.98x 19.28x 19.70x 24.64x 18.00x

Creditors Turnover Ratio 4.54x 4.96x 4.78x 4.66x 5.97x 5.54x
Inventory Turnover 2.12x 2.22x 1.95x 1.94x 2.43x 2.40x
Fixed Assets Turnover 2.81x 2.44x 2.26x 2.65x 3.00x 3.27x
Capital Turnover Ratio 0.75x 0.70x 0.78x 0.78x 0.85x 0.89x

(in days)
Debtors Days 22 30 19 18 15 20
Payable Days 79 73 75 77 60 65
Inventory Days 170 162 184 186 148 150
Cash Conversion Cycle 113 120 128 127 103 105

Dupoint Analysis
Net Profit Margin 25.32% 27.22% 32.34% 26.87% 25.17% 26.69%
Asset Turnover 0.63x 0.59x 0.65x 0.64x 0.71x 0.76x
Financial Leverage 1.22 1.21 1.19 1.22 1.24 1.21
ROE 19.38% 19.42% 24.77% 21.01% 22.18% 24.64%
 Forecast
2024 E 2025 E 2026 E 2027 E 2028 E Trend Mean Median

19.01% 19.96% 21.00% 22.11% 23.30% 14.66% 19.01%

7.27% 19.96% 21.00% 22.11% 23.30% 13.24% 19.96%
6.35% 18.28% 22.29% 22.11% 23.30% 12.79% 18.28%
8.38% 18.45% 22.39% 22.12% 23.28% 14.45% 18.45%
8.65% 8.56% 8.20% -8.21% -2.45% 16.27% 8.56%

56.00% 56.00% 56.00% 56.00% 56.00% 58.35% 56.00%

32.00% 32.00% 32.00% 32.00% 32.00% 34.78% 34.07%
28.50% 28.10% 28.40% 28.40% 28.40% 31.39% 30.92%
32.40% 32.00% 32.36% 32.36% 32.36% 35.59% 34.85%
24.31% 24.00% 24.28% 24.28% 24.28% 26.05% 25.25%

16.00% 16.00% 16.00% 16.00% 16.00% 15.50% 16.00%

3.50% 3.90% 3.60% 3.60% 3.60% 3.39% 3.51%
28.50% 28.10% 28.40% 28.40% 28.40% 31.39% 30.92%

12.78% 41.30% 62.37% 66.66% 70.41% 33.73% 44.25%

23.73% 22.31% 22.40% 27.04% 24.33% 22.00% 21.91%
3.03% 9.21% 13.97% 18.02% 17.13% 7.21% 9.05%
287.83x 267.72x 804.36x 797.25x 740.48x 414.55x 336.29x

16.36x 14.40x 14.40x 14.40x 14.40x 16.94x 16.28x

5.14x 5.14x 5.14x 5.14x 5.14x 5.10x 5.14x
2.25x 2.12x 2.12x 2.12x 2.12x 2.17x 2.12x
3.60x 3.92x 4.23x 4.58x 4.58x 3.28x 3.13x
0.92x 0.93x 1.11x 1.00x 1.11x 0.87x 0.87x

22 25 25 25 25 22 22
70 70 70 70 70 71 70
160 170 170 170 170 167 170
112 125 125 125 125 118 122

24.31% 24.00% 24.28% 24.28% 24.28% 0.26 0.25

0.80x 0.83x 0.70x 0.70x 0.70x 0.70 0.70
1.21 1.20 1.18 1.17 1.19 1.21 1.21
23.52% 23.83% 20.21% 19.97% 20.34% 0.22 0.22
 Schedules - ITC

(All figures in INR crores) Historical

Year ending 2018 A 2019 A 2020 A 2021 A 2022 A

# Working Capital Schedule

Inventory ₹ 7,495 ₹ 7,860 ₹ 8,879 ₹ 10,397 ₹ 10,864

Inventory Turnover 2.1 2.2 2.0 1.9 2.4
Days of Inventory on Hand 170 Days 162 Days 184 Days 186 Days 148 Days

Accounts Payables ₹ 3,496 ₹ 3,510 ₹ 3,630 ₹ 4,319

Accounts Payables Turnover 4.5 5.0 4.8 4.7 6.0
Days of Payables Outstanding 79 Days 73 Days 75 Days 77 Days 60 Days

Accounts Receivables ₹ 1,001 ₹ 1,505 ₹ 975 ₹ 846 ₹ 820

Accounts Recievables Turnover 16.2 12.0 19.3 19.7 24.6
Days of Sales Outstanding 22 Days 30 Days 19 Days 18 Days 15 Days

Working Capital ₹ 8,496 ₹ 5,868 ₹ 6,345 ₹ 7,613 ₹ 7,365

Change in working capital ₹(2,628) ₹ 477 ₹ 1,268 ₹(248)

# PP&E + Intangibles Schedule

# Opening Balance ₹ 16,321 ₹ 19,172 ₹ 21,511 ₹ 22,519

Add: Capex (Including Intangibles) ₹ 3,169 ₹ 2,441 ₹ 1,837 ₹ 2,142
as a % of Revenue 6.6% 4.9% 3.7% 3.5%
Less: Depreciation & Amortization ₹ 1,397 ₹ 1,645 ₹ 1,646 ₹ 1,732
as a % of Capex 44.1% 67.4% 89.6% 80.9%
Less: Disposal ₹ 28 ₹ 27 ₹3 ₹ 133
Other Adjustments ₹ 1,106 ₹ 1,570 ₹ 819 ₹ 657
# Closing Balance ₹ 16,321 ₹ 19,172 ₹ 21,511 ₹ 22,519 ₹ 23,452

# Common Equity

# Beginnning of Period ₹ 51,290 ₹ 57,915 ₹ 64,044 ₹ 59,117

Add: Net Income ₹ 11,271 ₹ 12,592 ₹ 15,306 ₹ 13,161 ₹ 15,243
Add: Other Comprehensive Income ₹ 398 ₹ 326 ₹(1,470) ₹ 207 ₹ 81
Less: Dividends ₹ 5,952 ₹ 6,519 ₹ 7,302 ₹ 18,881 ₹ 13,788
Other Adjustments ₹ 226 ₹(406) ₹ 586 ₹ 572
# Ending of Period ₹ 51,290 ₹ 57,915 ₹ 64,044 ₹ 59,117 ₹ 61,224
# Debt Schedule

Long Term + Short Term Debt Schedule

Beginning of Period ₹ 38 ₹ 29 ₹ 10 ₹ 275 ₹ 271
(+)Debt Issued/ (-)Debt Paydown ₹(9) ₹(19) ₹ 265 ₹(4) ₹(21)
# End of Period ₹ 29 ₹ 10 ₹ 275 ₹ 271 ₹ 249

Total Interest Expense

Interest Expense ₹ 90 ₹ 45 ₹ 55 ₹ 45 ₹ 39
Weighted average interest rate 239.7% 157.4% 546.3% 16.2% 14.5%
Forecast Forecast
2023 A 2024 E 2025 E 2026 E 2027 E 2028 E

₹ 12,879 ₹ 16,350 ₹ 20,840 ₹ 25,216 ₹ 30,792 ₹ 37,967

2.4 2.3 2.1 2.1 2.1 2.1
150 Days 160 Days 170 Days 170 Days 170 Days 170 Days

₹ 4,417 ₹ 4,417 ₹ 4,417 ₹ 4,417 ₹ 4,417 ₹ 4,417

5.5 5.1 5.1 5.1 5.1 5.1
65 Days 70 Days 70 Days 70 Days 70 Days 70 Days

₹ 1,386 ₹ 1,635 ₹ 2,229 ₹ 2,697 ₹ 3,293 ₹ 4,061

18.0 16.4 14.4 14.4 14.4 14.4
20 Days 22 Days 25 Days 25 Days 25 Days 25 Days

₹ 9,848 ₹ 13,568 ₹ 18,651 ₹ 23,495 ₹ 29,668 ₹ 37,610

₹ 2,483 ₹ 3,720 ₹ 5,084 ₹ 4,844 ₹ 6,172 ₹ 7,943

₹ 23,452 ₹ 25,496 ₹ 27,719 ₹ 30,650 ₹ 34,389 ₹ 38,849

₹ 3,513 ₹ 4,180 ₹ 6,018 ₹ 7,281 ₹ 8,892 ₹ 10,964
5% 5% 6% 6% 6% 6%
₹ 2,459 ₹ 2,926 ₹ 3,912 ₹ 4,369 ₹ 5,335 ₹ 6,578
70% 70% 65% 60% 60% 60%
₹ 48 ₹ 53 ₹ 59 ₹ 73 ₹ 58 ₹ 61
₹ 1,038 ₹ 1,021 ₹ 884 ₹ 900 ₹ 961 ₹ 941
₹ 25,496 ₹ 27,719 ₹ 30,650 ₹ 34,389 ₹ 38,849 ₹ 44,115

₹ 61,224 ₹ 68,710 ₹ 77,788 ₹ 89,855 ₹ 106,254 ₹ 130,268

₹ 17,580 20074.99 23824.66 29214.433 35730.925 44107.869
₹ 150 ₹ 150 ₹ 200 ₹ 200 ₹ 250 ₹ 250
₹ 10,488 ₹ 11,396 ₹ 12,371 ₹ 13,385 ₹ 12,286 ₹ 11,985
₹ 245 ₹ 249 ₹ 413 ₹ 370 ₹ 319 ₹ 338
₹ 68,710 ₹ 77,788 ₹ 89,855 ₹ 106,254 ₹ 130,268 ₹ 162,978
 ₹ 249 ₹ 292 ₹ 344 ₹ 411 ₹ 439 ₹ 472
₹ 42 ₹ 53 ₹ 67 ₹ 27 ₹ 34 ₹ 45
₹ 292 ₹ 344 ₹ 411 ₹ 439 ₹ 472 ₹ 517

₹ 67 ₹ 83 ₹ 105 ₹ 43 ₹ 53 ₹ 70
157.4% 157.4% 157.4% 157.4% 157.4% 157.4%
Assumptions- ITC

(All figures in INR crores) Historical

Year ending 2018 A 2019 A 2020 A 2021 A 2022 A 2023 A

Revenue Forecast

FMCG- Cigarettes ₹ 24,848 ₹ 22,913 ₹ 23,679 ₹ 22,557 ₹ 26,158 ₹ 29,321

% Growth -7.8% 3.3% -4.7% 16.0% 12.1%
FMCG- Others ₹ 11,339 ₹ 12,517 ₹ 12,844 ₹ 14,737 ₹ 15,993 ₹ 17,367
% Growth 10.4% 2.6% 14.7% 8.5% 8.6%
Hotels ₹ 1,481 ₹ 1,728 ₹ 1,912 ₹ 660 ₹ 1,341 ₹ 1,924
% Growth 16.7% 10.6% -65.5% 103.3% 43.5%
Agri Business ₹ 5,354 ₹ 6,075 ₹ 5,913 ₹ 7,252 ₹ 11,269 ₹ 15,213
% Growth 13.5% -2.7% 22.7% 55.4% 35.0%
Paperboards, Paper and Packaging ₹ 3,695 ₹ 4,230 ₹ 4,499 ₹ 4,550 ₹ 6,204 ₹ 7,723
% Growth 14.5% 6.3% 1.1% 36.4% 24.5%
Others ₹ 1,525 ₹ 1,884 ₹ 2,122 ₹ 2,329 ₹ 2,730 ₹ 2,917
% Growth 23.6% 12.6% 9.8% 17.2% 6.9%
Adjustment ₹(3,914) ₹(3,564) ₹(4,162) ₹(3,562) ₹(3,950) ₹(4,214)
% Growth -8.9% 16.8% -14.4% 10.9% 6.7%
Net Revenue ₹ 44,329 ₹ 45,784 ₹ 46,807 ₹ 48,523 ₹ 59,745 ₹ 70,251
 Forecast
2024 E 2025 E 2026 E 2027 E 2028 E

₹ 34,012 ₹ 39,454 ₹ 45,767 ₹ 53,090 ₹ 61,584

16.0% 16.0% 16.0% 16.0% 16.0%
₹ 19,104 ₹ 21,015 ₹ 23,116 ₹ 25,428 ₹ 27,970
10.0% 10.0% 10.0% 10.0% 10.0%
₹ 2,886 ₹ 4,329 ₹ 6,494 ₹ 9,740 ₹ 14,610
50.0% 50.0% 50.0% 50.0% 50.0%
₹ 20,537 ₹ 27,725 ₹ 37,429 ₹ 50,529 ₹ 68,214
35.0% 35.0% 35.0% 35.0% 35.0%
₹ 8,495 ₹ 9,344 ₹ 10,279 ₹ 11,307 ₹ 12,437
10.0% 10.0% 10.0% 10.0% 10.0%
₹ 3,209 ₹ 3,530 ₹ 3,883 ₹ 4,271 ₹ 4,698
10.0% 10.0% 10.0% 10.0% 10.0%
₹(4,635) ₹(5,099) ₹(5,609) ₹(6,170) ₹(6,787)
10.0% 10.0% 10.0% 10.0% 10.0%
₹ 83,608 ₹ 100,298 ₹ 121,358 ₹ 148,195 ₹ 182,728
Weighted Average Cost of Capital (WACC)

Cost of Equity (Ke) for ITC

Risk Free Rate 7.22%
Equity Risk Premium 7.25%
Beta of ITC 0.3
Cost of Equity 9.32%
WACC 9.32%
Comparable Companies Analysis

(All figures in INR crores) Market Data Financials Valuation

Market
Company Share Capitalisat Enterprise Revenue EBITDA EPS P/E EV/Revenue
Price ion Value

ITC Ltd. ₹ 384 ₹ 470,898 ₹ 487,064 ₹ 70,251 ₹ 24,941 ₹ 14 27x 7x

Godfrey Phillips India ₹ 1,820 ₹ 9,195 ₹ 9,517 ₹ 3,491 ₹ 964 ₹ 115 16x 3x
VST Industries ₹ 3,146 ₹ 4,945 ₹ 4,923 ₹ 1,293 ₹ 485 ₹ 224 14x 4x
Hindustan Unilever Ltd. ₹ 2,560 ₹ 595,880 ₹ 593,068 ₹ 59,132 ₹ 14,308 ₹ 42 61x 10x
Dabur ₹ 545 ₹ 97,022 ₹ 97,526 ₹ 11,370 ₹ 2,629 ₹ 10 56x 9x
Britannia Industries ₹ 4,322 ₹ 104,153 ₹ 107,009 ₹ 15,828 ₹ 2,795 ₹ 90 48x 7x

Mean 39x 6x
Median 48x 7x
High 61x 10x
Low 14x 3x

Target Comapany Valuation P/E EV/Revenue

Implied Enterprise Value ₹ 727,563 ₹ 448,215
Net Debt -₹ 4,410 -₹ 4,405
Implied Market Value ₹ 731,972 ₹ 452,620
Shares Outstanding 1278 1215
Implied Value Per Share ₹ 573 ₹ 373

Undervalued Overvalued
Valuation

EV/EBITDA

20x
10x
10x
41x
37x
38x

27x
37x
41x
10x

EV/EBITDA
₹ 682,747
-₹ 19,459
₹ 702,206
1215
₹ 578

Undervalued
DCF- ITC

(All figures in INR crores) Forecast

Year ending 2023 A 2024 E 2025 E 2026 E

Free Cash Flow to Firm (FCFF)

Operating Cash Flow Calculation

Revenue ₹ 70,251 ₹ 83,608 ₹ 100,298 ₹ 121,358
(-) Operating Expenses ₹ 45,309 ₹ 56,853 ₹ 68,203 ₹ 82,524
(-) Depreciation ₹ 2,536 ₹ 2,926 ₹ 3,912 ₹ 4,369
EBIT ₹ 22,405 ₹ 23,828 ₹ 28,184 ₹ 34,466
(-) Taxes ₹ 5,601 ₹ 6,022 ₹ 7,046 ₹ 8,616
Post Tax Operating Profit (NOPAT) ₹ 16,804 ₹ 17,806 ₹ 21,138 ₹ 25,849
(+) Depreciation ₹ 2,536 ₹ 2,926 ₹ 3,912 ₹ 4,369
Post Tax Operating Cash Profit ₹ 19,340 ₹ 20,732 ₹ 25,049 ₹ 30,218

Operating Cash Investment

Capital Expenditure Investments ₹ 2,142 ₹ 3,513 ₹ 4,180 ₹ 6,018
Change in Working Capital ₹ 2,483 ₹ 3,720 ₹ 5,084 ₹ 4,844
Operating Cash Investment ₹ 4,624 ₹ 7,233 ₹ 9,264 ₹ 10,862

Free Cash Flow to Firm

FCFF ₹ 14,716 ₹ 13,500 ₹ 15,786 ₹ 19,357

Present Value of Future Cash Flow

Years from Current 1 2 3

Discount Factor 1.00 1.00 1.00
Present Value of FCFF ₹ 20,732 ₹ 25,049 ₹ 30,218

Terminal Value

Terminal Growth
Terminal Value
Present Value of Terminal Value

Share Price Calculation

Enterprise Value (EV) for ITC ₹ 228,309

(-) Short Term Debt ₹ 4,011
(-) Long Term Debt ₹ 73,819
(+) Cash and cash equivalents ₹ 4,659
Add/Less: Non-operating Adj 0
Consolidated Equity Value ₹ 155,138
(-) Value of Minority Interest ₹ 213
Equity Value 3,200
Total Shares Outstanding (crores) 13
Implied Equity Value per Share 255.80
Current Market Price 483
Gap -47.04% Overvalued
orecast
2027 E 2028 E

₹ 148,195 ₹ 182,728
₹ 100,772 ₹ 124,255
₹ 5,335 ₹ 6,578
₹ 42,087 ₹ 51,895
₹ 10,522 ₹ 12,974
₹ 31,565 ₹ 38,921
₹ 5,335 ₹ 6,578
₹ 36,900 ₹ 45,499

₹ 7,281 ₹ 8,892
₹ 6,172 ₹ 7,943
₹ 13,454 ₹ 16,834

₹ 23,447 ₹ 28,665

4 5
1.00 1.00
₹ 36,900 ₹ 45,499

5.50%
₹ 69,909
₹ 69,909
Beta - ITC

ITC Monthly Returns Nifty 50 Monthly Returns

Date osing price Returns Closing price Returns

5/1/2018 222.3 10736.2
6/1/2018 222.0 -0.1% 10714.3 -0.2%
7/1/2018 248.2 11.8% 11356.5 6.0%
8/1/2018 266.7 7.4% 11680.5 2.9%
9/1/2018 248.3 -6.9% 10930.5 -6.4%
10/1/2018 233.6 -5.9% 10386.6 -5.0%
11/1/2018 238.3 2.0% 10876.8 4.7%
12/1/2018 234.9 -1.5% 10862.5 -0.1%
1/1/2019 232.4 -1.1% 10831.0 -0.3%
2/1/2019 230.2 -0.9% 10792.5 -0.4%
3/1/2019 247.9 7.7% 11623.9 7.7%
4/1/2019 251.3 1.4% 11748.2 1.1%
5/1/2019 232.3 -7.6% 11922.8 1.5%
6/1/2019 232.7 0.2% 11788.8 -1.1%
7/1/2019 229.6 -1.3% 11118.0 -5.7%
8/1/2019 208.8 -9.1% 11023.3 -0.9%
9/1/2019 220.8 5.8% 11474.5 4.1%
10/1/2019 219.0 -0.8% 11877.5 3.5%
11/1/2019 209.4 -4.4% 12056.0 1.5% BETA 0.61
12/1/2019 202.0 -3.5% 12168.5 0.9%
1/1/2020 199.8 -1.1% 11962.1 -1.7%
2/1/2020 167.9 -16.0% 11201.8 -6.4%
3/1/2020 145.9 -13.1% 8597.8 -23.2%
4/1/2020 154.7 6.0% 9859.9 14.7%
5/1/2020 167.7 8.4% 9580.3 -2.8%
6/1/2020 165.4 -1.4% 10302.1 7.5%
7/1/2020 165.0 -0.3% 11073.5 7.5%
8/1/2020 170.8 3.5% 11387.5 2.8%
9/1/2020 153.4 -10.2% 11247.5 -1.2%
10/1/2020 147.7 -3.8% 11642.4 3.5%
11/1/2020 173.0 17.2% 12969.0 11.4%
12/1/2020 186.8 7.9% 13981.8 7.8%
1/1/2021 181.6 -2.8% 13634.6 -2.5%
2/1/2021 182.2 0.3% 14529.2 6.6%
3/1/2021 199.9 9.7% 14690.7 1.1%
4/1/2021 185.3 -7.3% 14631.1 -0.4%
5/1/2021 198.1 6.9% 15582.8 6.5%
6/1/2021 185.4 -6.4% 15721.5 0.9%
7/1/2021 192.7 3.9% 15763.0 0.3%
8/1/2021 198.7 3.1% 17132.2 8.7%
9/1/2021 222.0 11.8% 17618.2 2.8%
10/1/2021 209.8 -5.5% 17671.7 0.3%
11/1/2021 207.9 -0.9% 16983.2 -3.9%
12/1/2021 205.0 -1.4% 17354.1 2.2%
1/1/2022 207.0 1.0% 17339.8 -0.1%
2/1/2022 202.9 -2.0% 16793.9 -3.1%
3/1/2022 241.1 18.8% 17464.8 4.0%
4/1/2022 249.7 3.6% 17102.6 -2.1%
5/1/2022 260.3 4.3% 16584.6 -3.0%
6/1/2022 269.3 3.4% 15780.3 -4.8%
7/1/2022 298.3 10.8% 17158.3 8.7%
8/1/2022 315.5 5.8% 17759.3 3.5%
9/1/2022 327.0 3.7% 17094.3 -3.7%
10/1/2022 343.3 5.0% 18012.2 5.4%
11/1/2022 334.7 -2.5% 18758.3 4.1%
12/1/2022 326.4 -2.5% 18105.3 -3.5%
1/1/2023 346.9 6.3% 17662.2 -2.4%
2/1/2023 370.9 6.9% 17303.9 -2.0%
3/1/2023 383.5 3.4% 17359.8 0.3%
4/1/2023 398.5 3.9% 17660.2 1.7%
5/1/2023 423.4 6.2% 17427.0 -1.3%
6/1/2023 447.0 5.6% 18134.8 4.1%
7/1/2023 451.6 1.0% 18579.4 2.5%
8/1/2023 466.0 3.2% 19246.5 3.6%
9/1/2023 440.0 -5.6% 19784.0 2.8%
10/1/2023 441.0 0.2% 19258.1 -2.7%
11/1/2023 430.0 -2.5% 19622.4 1.9%
12/1/2023 437.9 1.8% 19064.0 -2.8%
1/1/2024 463.5 5.8% 20194.1 5.9%
2/1/2024 442.0 -4.6% 21,727.8 7.6%
3/1/2024 408.9 -7.5% 21,780.7 0.2%
4/1/2024 436.0 6.6% 22,048.3 1.2%
5/1/2024 434.0 -0.5% 22,455.0 1.8%
6/1/2024 426.3 -1.8% 22,567.8 0.5%
7/1/2024 495.9 16.3% 23,337.9 3.4%
8/1/2024 504.0 1.6% 23,992.9 2.8%
9/1/2024 518.1 2.8% 25,030.9 4.3%
10/1/2024 491.0 -5.2% 25,333.6 1.2%
11/1/2024 476.0 -3.1% 25,788.4 1.8%
12/1/2024 483.9 1.7% 24,140.9 -6.4%