2025

FINANCIAL
MODELLING
REPORT
Presented By : Ritik Singh
Disclaimer : Prepared in the context of an educational assignment, this report is meant for
academic learning purposes.
TABLE OF
CONTENTS

About the Company 1

Historical Financial Statement 2

Common Size Statement 3

Ratio Analysis 4

Forcasting 5

WACC 6

Intrensic Value 7

Free Cash Flow to Firm (FCFF) 8

Summary and Conclusion 9

ABOUT THE COMPANY
ITC is one of India's foremost private sector companies and a diversified
conglomerate with businesses spanning Fast Moving Consumer Goods,
Paperboards and Packaging, Agri Business and Information Technology. The
Company is acknowledged as one of India's most valuable business
corporations with a Gross Revenue of ₹ 69,446 crores and Net Profit of ₹
20,422 crores (as on 31.03.2024). ITC was ranked as India's most admired
company, according to a survey conducted by Fortune India, in association
with Hay Group.
 Income Statement
Years Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25

Sales ₹ 43,448.9 ₹ 48,339.6 ₹ 49,387.7 ₹ 49,257.5 ₹ 60,644.5 ₹ 70,919.0 ₹ 70,866.2 ₹ 75,323.3

Sales Growth 11.26% 2.17% -0.26% 23.12% 16.94% -0.07% 6.29%

COGS ₹ 18,206.6 ₹ 20,038.1 ₹ 20,034.6 ₹ 22,418.2 ₹ 29,162.5 ₹ 32,565.9 ₹ 30,881.1 ₹ 31,978.7

COGS % sales 41.90% 41.45% 40.57% 45.51% 48.09% 45.92% 43.58% 42.46%

Gross profit ₹ 25,242.3 ₹ 28,301.5 ₹ 29,353.1 ₹ 26,839.3 ₹ 31,482.0 ₹ 38,353.1 ₹ 39,985.1 ₹ 43,344.6
Gross Margins 58.10% 58.55% 59.43% 54.49% 51.91% 54.08% 56.42% 57.54%

Selling & General Expenses ₹ 4,960.9 ₹ 5,586.2 ₹ 5,713.8 ₹ 5,311.2 ₹ 5,968.3 ₹ 6,912.6 ₹ 7,618.2 ₹ 11,196.6
S&G % Sales 11.42% 11.56% 11.57% 10.78% 9.84% 9.75% 10.75% 14.86%

EBITDA ₹ 20,281.5 ₹ 22,715.3 ₹ 23,639.3 ₹ 21,528.1 ₹ 25,513.7 ₹ 31,440.5 ₹ 32,366.9 ₹ 32,148.0

EBITDA % Sales 46.68% 46.99% 47.86% 43.71% 42.07% 44.33% 45.67% 42.68%

Interset ₹ 115.0 ₹ 71.4 ₹ 81.4 ₹ 58.0 ₹ 60.0 ₹ 77.8 ₹ 80.1 ₹ 45.1

Interset % Sales 0.26% 0.15% 0.16% 0.12% 0.10% 0.11% 0.11% 0.06%

Depreciation ₹ 1,236.3 ₹ 1,396.6 ₹ 1,644.9 ₹ 1,645.6 ₹ 1,732.4 ₹ 1,809.0 ₹ 1,816.4 ₹ 1,646.3

Depreciation % Sales 2.85% 2.89% 3.33% 3.34% 2.86% 2.55% 2.56% 2.19%

Earnings Before Tax ₹ 18,930.20 ₹ 21,247.26 ₹ 21,913.04 ₹ 19,824.55 ₹ 23,721.30 ₹ 29,553.70 ₹ 30,470.46 ₹ 30,456.61
Earnings Before Tax % Sales 43.57% 43.95% 44.37% 40.25% 39.12% 41.67% 43.00% 40.43%

Tax ₹ 5,916 ₹ 6,314 ₹ 4,442 ₹ 4,555 ₹ 5,237 ₹ 6,438 ₹ 6,389 ₹ 6,890

Effective Tax Rate % EBT 31.25% 29.72% 20.27% 22.98% 22.08% 21.79% 20.97% 22.62%
Net Profit ₹ 13,013.8 ₹ 14,933.3 ₹ 17,471.3 ₹ 15,269.3 ₹ 18,484.0 ₹ 23,115.3 ₹ 24,081.9 ₹ 23,566.1
Net Margins 29.95% 30.89% 35.38% 31.00% 30.48% 32.59% 33.98% 31.29%

No of Equity Shares ₹ 1,220.4 ₹ 1,225.9 ₹ 1,229.2 ₹ 1,230.9 ₹ 1,232.3 ₹ 1,242.8 ₹ 1,248.5 ₹ 1,251.4

Earnings per Share ₹ 10.7 ₹ 12.2 ₹ 14.2 ₹ 12.4 ₹ 15.0 ₹ 18.6 ₹ 19.3 ₹ 18.8
EPS Growth % 0% 114% 117% 87% 121% 124% 104% 98%

Dividend per Share ₹ 5.1 ₹ 5.8 ₹ 10.1 ₹ 10.8 ₹ 11.5 ₹ 15.5 ₹ 13.7 ₹ 14.3
Dividend payout ratio 48% 47% 71% 87% 77% 83% 71% 76%

Retained Earnings 52% 53% 29% 13% 23% 17% 29% 24%

Balance sheet
Years Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25

Equity Share Capital ₹ 1,220.4 ₹ 1,225.9 ₹ 1,229.2 ₹ 1,230.9 ₹ 1,232.3 ₹ 1,242.8 ₹ 1,248.5 ₹ 1,251.4
Reserves ₹ 51,289.7 ₹ 57,915.0 ₹ 64,044.0 ₹ 59,116.5 ₹ 61,223.2 ₹ 67,912.5 ₹ 73,258.5 ₹ 68,778.6
Borrowings ₹ 35.9 ₹ 13.4 ₹ 277.5 ₹ 270.8 ₹ 249.4 ₹ 306.0 ₹ 303.4 ₹ 284.5
Other Liabilities ₹ 11,694.9 ₹ 12,584.7 ₹ 11,760.0 ₹ 13,142.6 ₹ 14,491.0 ₹ 16,369.7 ₹ 16,943.5 ₹ 17,776.1
Total Liabilities ₹ 64,240.9 ₹ 71,739.0 ₹ 77,310.8 ₹ 73,760.8 ₹ 77,196.0 ₹ 85,831.0 ₹ 91,754.0 ₹ 88,090.7

Fixed Assets Net Block ₹ 16,524.0 ₹ 19,374.2 ₹ 21,713.3 ₹ 23,298.5 ₹ 24,231.6 ₹ 25,851.3 ₹ 27,820.2 ₹ 21,958.2
Capital Work in Progress ₹ 5,508.3 ₹ 4,136.4 ₹ 3,256.5 ₹ 4,011.3 ₹ 3,225.5 ₹ 3,003.3 ₹ 2,860.8 ₹ 1,087.6
Investments ₹ 22,052.9 ₹ 25,043.5 ₹ 28,663.4 ₹ 24,870.9 ₹ 24,841.0 ₹ 29,415.0 ₹ 31,114.0 ₹ 34,719.8
Other Assets ₹ 7,078.8 ₹ 7,138.1 ₹ 4,958.5 ₹ 4,022.2 ₹ 6,917.4 ₹ 7,953.9 ₹ 4,562.6 ₹ 5,955.5
Total non current Assets ₹ 51,163.9 ₹ 55,692.2 ₹ 58,591.6 ₹ 56,202.9 ₹ 59,215.6 ₹ 66,223.4 ₹ 66,357.6 ₹ 63,721.1

Receivables ₹ 2,682.3 ₹ 4,035.3 ₹ 2,562.5 ₹ 2,501.7 ₹ 2,461.9 ₹ 2,956.2 ₹ 4,025.8 ₹ 4,719.7

Inventory ₹ 7,495.1 ₹ 7,859.6 ₹ 8,879.3 ₹ 10,397.2 ₹ 10,864.2 ₹ 11,771.2 ₹ 14,152.9 ₹ 15,637.6
Cash & Bank ₹ 2,899.6 ₹ 4,152.0 ₹ 7,277.3 ₹ 4,659.0 ₹ 4,654.4 ₹ 4,880.2 ₹ 7,217.7 ₹ 4,012.4
Total Current Assets ₹ 13,077.0 ₹ 16,046.9 ₹ 18,719.2 ₹ 17,557.9 ₹ 17,980.5 ₹ 19,607.5 ₹ 25,396.4 ₹ 24,369.6
Total Assets ₹ 64,240.9 ₹ 71,739.0 ₹ 77,310.8 ₹ 73,760.8 ₹ 77,196.0 ₹ 85,831.0 ₹ 91,754.0 ₹ 88,090.7

Check TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE

Cash flow statement

Years Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25

Operating Activities
Profit from operations ₹ 17,433 ₹ 18,862 ₹ 19,416 ₹ 17,326 ₹ 20,857 ₹ 26,052 ₹ 26,635 ₹ 26,719
Receivables (₹ 964) (₹ 755) ₹ 1,411 (₹ 66) (₹ 732) (₹ 884) (₹ 934) (₹ 1,023)
Inventory ₹ 602 (₹ 359) (₹ 508) (₹ 1,460) (₹ 466) (₹ 1,098) (₹ 2,545) (₹ 2,975)
Payables ₹ 2,098 ₹ 639 (₹ 607) ₹ 1,112 ₹ 1,099 ₹ 1,058 ₹ 141 ₹ 1,256
Loans Advances ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0
Other WC items ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0
Working capital changes ₹ 1,736 (₹ 476) ₹ 296 (₹ 413) (₹ 100) (₹ 924) (₹ 3,337) (₹ 2,742)
Direct taxes (₹ 6,000) (₹ 5,803) (₹ 5,023) (₹ 4,387) (₹ 4,982) (₹ 6,250) (₹ 6,120) (₹ 6,350)
Cash from Operating Activities ₹ 14,905 ₹ 12,108 ₹ 14,985 ₹ 12,112 ₹ 15,676 ₹ 17,954 ₹ 13,840 ₹ 14,885

Investing Activities
Fixed assets purchased (₹ 2,878) (₹ 3,169) (₹ 2,441) (₹ 1,837) (₹ 2,142) (₹ 2,743) (₹ 3,563) (₹ 2,279)
Fixed assets sold ₹ 80 ₹ 28 ₹ 27 ₹3 ₹ 133 ₹ 49 ₹ 107 ₹ 175
Investments purchased (₹ 98,330) (₹ 94,187) (₹ 79,835) (₹ 57,553) (₹ 69,776) (₹ 80,932) (₹ 75,107) (₹ 66,373)
Investments sold ₹ 95,017 ₹ 92,454 ₹ 75,835 ₹ 62,797 ₹ 70,992 ₹ 77,230 ₹ 77,830 ₹ 67,311
Interest received ₹ 736 ₹ 1,184 ₹ 1,513 ₹ 1,275 ₹ 1,035 ₹ 1,324 ₹ 1,138 ₹ 1,072
Dividends received ₹ 13 ₹ 13 ₹ 17 ₹7 ₹ 16 ₹ 19 ₹ 36 ₹ 47
Investment in group cos ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0
Redemp n Canc of Shares ₹0 ₹0 ₹0 (₹ 2) (₹ 2) (₹ 2) (₹ 65) (₹ 30)
Acquisition of companies ₹ 18 ₹ 18 ₹0 ₹0 ₹0 ₹ 56 ₹0 ₹0
Inter corporate deposits ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0
Other investing items (₹ 1,769) (₹ 1,887) (₹ 1,290) ₹ 1,051 (₹ 2,494) (₹ 733) ₹ 1,187 (₹ 319)
Cash from Investing Activity - (₹ 7,113) (₹ 5,546) (₹ 6,174) ₹ 5,741 (₹ 2,238) (₹ 5,732) ₹ 1,563 (₹ 396)

Financing Activities
Proceeds from shares ₹ 913 ₹ 969 ₹ 625 ₹ 291 ₹ 292 ₹ 2,477 ₹ 1,443 ₹ 797
Redemption of debentures ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0 ₹0
Proceeds from borrowings ₹ 11 ₹0 ₹0 ₹0 ₹0 ₹0 ₹8 ₹ 90
Repayment of borrowings (₹ 8) (₹ 18) (₹ 3) (₹ 2) (₹ 1) (₹ 1) (₹ 2) (₹ 54)
Interest paid fin (₹ 49) (₹ 98) (₹ 44) (₹ 41) (₹ 40) (₹ 41) (₹ 46) (₹ 50)
Dividends paid (₹ 5,952) (₹ 6,519) (₹ 7,302) (₹ 18,881) (₹ 13,788) (₹ 15,418) (₹ 19,899) (₹ 17,782)
Financial liabilities ₹0 ₹0 (₹ 49) (₹ 55) (₹ 59) (₹ 59) (₹ 67) (₹ 131)
Other financing items (₹ 1,136) (₹ 1,203) (₹ 1,409) ₹ 55 ₹ 15 ₹ 35 ₹ 12 ₹ 93
Cash from Financing Activity - (₹ 6,221) (₹ 6,869) (₹ 8,182) (₹ 18,633) (₹ 13,581) (₹ 13,007) (₹ 18,551) (₹ 17,037)

Net Cash Flow ₹ 1,571.0 ₹ (307.0) ₹ 629.0 ₹ (780.0) ₹ (143.0) ₹ (785.0) ₹ (3,148.0) ₹ (2,548.0)
 Common Size Income Statement- ITC Ltd

Particulars Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25

Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Raw Material Cost 35.12% 36.14% 34.13% 36.46% 36.54% 42.18% 44.64% 41.41% 39.28% 43.42%
Change in Inventory 0.50% -1.39% -2.37% 0.42% 1.42% 1.31% 1.13% 0.51% 0.83% 0.96%
Power and Fuel 1.46% 1.37% 1.50% 1.54% 1.58% 1.42% 1.47% 1.74% 1.58% 0.00%
Other Mfr. Exp 4.04% 3.94% 3.91% 3.87% 3.86% 3.22% 3.11% 3.28% 3.55% 0.00%
Employee Cost 8.78% 8.49% 8.66% 8.64% 8.70% 9.06% 8.06% 8.09% 8.66% 8.19%
Selling and admin 10.87% 9.77% 9.10% 9.41% 9.09% 8.60% 8.01% 7.90% 8.72% 0.00%
Other Expenses 3.15% 2.73% 2.32% 2.15% 2.48% 2.18% 1.83% 1.85% 2.03% 14.86%
Other Income 3.78% 4.11% 5.16% 4.30% 4.89% 5.23% 3.15% 2.96% 3.96% 23.44%
Depreciation 2.75% 2.70% 2.85% 2.89% 3.33% 3.34% 2.86% 2.55% 2.56% 2.19%
Interest 0.20% 0.11% 0.26% 0.15% 0.16% 0.12% 0.10% 0.11% 0.11% 0.06%
Profit before tax 37.91% 37.47% 40.07% 39.62% 40.57% 36.42% 34.20% 36.54% 38.30% 55.68%
Tax 13.67% 12.97% 13.62% 13.06% 8.99% 9.25% 8.64% 9.08% 9.01% 9.15%
Net profit 23.84% 24.06% 25.94% 26.05% 30.99% 26.72% 25.13% 27.06% 28.87% 46.13%
Dividend Amount 17.45% 13.49% 14.47% 14.58% 25.26% 26.86% 23.37% 27.16% 24.22% 23.84%
EBITDA 40.86% 40.28% 43.18% 42.65% 44.06% 39.88% 37.16% 39.20% 40.97% 57.93%

Common Size Balance Sheet - ITC ltd

Particulars Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25

Total Liablities 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Equity Share Capital 1.56% 2.17% 1.90% 1.71% 1.59% 1.67% 1.60% 1.45% 1.36% 1.42%
Reserves 81.07% 80.86% 79.84% 80.73% 82.84% 80.15% 79.31% 79.12% 79.84% 78.08%
Borrowings 0.16% 0.08% 0.06% 0.02% 0.36% 0.37% 0.32% 0.36% 0.33% 0.32%
Other Liabilities 17.21% 16.89% 18.20% 17.54% 15.21% 17.82% 18.77% 19.07% 18.47% 20.18%

Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Net Block 29.25% 28.43% 25.72% 27.01% 28.09% 31.59% 31.39% 30.12% 30.32% 24.93%
Capital Work in Progress 4.96% 6.67% 8.57% 5.77% 4.21% 5.44% 4.18% 3.50% 3.12% 1.23%
Investments 22.74% 31.45% 34.33% 34.91% 37.08% 33.72% 32.18% 34.27% 33.91% 39.41%
Other Assets 43.05% 33.44% 31.38% 32.32% 30.63% 29.26% 32.25% 32.11% 32.65% 34.42%
Receivables 3.71% 4.43% 4.18% 5.62% 3.31% 3.39% 3.19% 3.44% 4.39% 5.36%
Inventory 17.54% 14.52% 11.67% 10.96% 11.49% 14.10% 14.07% 13.71% 15.42% 17.75%
Cash & Bank 11.74% 5.31% 4.51% 5.79% 9.41% 6.32% 6.03% 5.69% 7.87% 4.55%
 Ratio Analysis-ITC LTD
Years Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Trend Mean Median

SalesGrowth 11.26% 2.17% -0.26% 23.12% 16.94% -0.07% 6.29% 8.49% 6.29%
GrossMargin 12.12% 3.72% -8.56% 17.30% 21.83% 4.26% 8.40% 8.44% 8.40%
EBITDA Growth 12.00% 4.07% -8.93% 18.51% 23.23% 2.95% -0.68% 7.31% 4.07%
EBIT Growth 12.24% 3.13% -9.53% 19.66% 24.59% 3.10% -0.05% 7.59% 3.13%
Net Profit Growth 14.75% 16.99% -12.60% 21.05% 25.06% 4.18% -2.14% 9.61% 14.75%
Dividend Growth 11.65% 76.52% 5.91% 6.98% 34.78% -11.29% 4.36% 18.42% 6.98%

Gross Margin 58.10% 58.55% 59.43% 54.49% 51.91% 54.08% 56.42% 57.54% 56.32% 56.98%
EBITDA Margin 46.68% 46.99% 47.86% 43.71% 42.07% 44.33% 45.67% 42.68% 45.00% 45.00%
EBIT Margin 43.83% 44.10% 44.53% 40.36% 39.21% 41.78% 43.11% 40.49% 42.18% 42.45%
EBT Margin 43.57% 43.95% 44.37% 40.25% 39.12% 41.67% 43.00% 40.43% 42.04% 42.33%
Net Profit Margin 29.95% 30.89% 35.38% 31.00% 30.48% 32.59% 33.98% 31.29% 31.95% 31.14%

SalesExpenses%Sales 11.42% 11.56% 11.57% 10.78% 9.84% 9.75% 10.75% 14.86% 11.32% 11.10%
Depreciation%Sales 2.85% 2.89% 3.33% 3.34% 2.86% 2.55% 2.56% 2.19% 2.82% 2.85%
OperatingIncome%Sales 43.83% 44.10% 44.53% 40.36% 39.21% 41.78% 43.11% 40.49% 42.18% 42.45%

Return on Capital Employed 36.24% 36.04% 33.55% 32.80% 37.93% 42.66% 40.84% 43.38% 37.93% 37.09%
Retained Earnings% 51.70% 52.80% 28.59% 13.34% 23.33% 16.66% 28.72% 23.80% 29.87% 26.19%
Return on Equity% 24.78% 25.25% 26.77% 25.30% 29.60% 33.43% 32.32% 33.65% 28.89% 28.18%
Self Sustained Growth Rate 12.81% 13.33% 7.65% 3.38% 6.90% 5.57% 9.28% 8.01% 8.37% 7.83%
Interest Coverage Ratio 165.60& 298.58& 270.27& 342.98& 396.42& 381.01& 381.60& 676.91& 364.17& 36199.68%

Debtor Turnover Ratio 16.20& 11.98& 19.27& 19.69& 24.63& 23.99& 17.60& 15.96& 18.67& 18.44&
Creditor Turnover Ratio 3.72 3.84 4.20 3.75 4.18 4.33 4.18 4.24 4.06 4.18
Inventory Turnover 5.80 6.15 5.56 4.74 5.58 6.02 5.01 4.82 5.46 5.57
Fixed Asset Turnover 2.63 2.50 2.27 2.11 2.50 2.74 2.55 3.43 2.59 2.52
Capital Turnover Ratio 0.83 0.82 0.76 0.82 0.97 1.03 0.95 1.08 0.91 0.89

(in days)
Debtor Days 23 Days 30 Days 19 Days 19 Days 15 Days 15 Days 21 Days 23 Days 21 Days 20 Days
Payable Days 98 Days 95 Days 87 Days 97 Days 87 Days 84 Days 87 Days 86 Days 90 Days 87 Days
Inventory Days 63 Days 59 Days 66 Days 77 Days 65 Days 61 Days 73 Days 76 Days 67 Days 66 Days
Cash Conversion Cycle (in days) -13 Days -5 Days -2 Days -2 Days -7 Days -8 Days 6 Days 13 Days -2 Days -4 Days

CFO/Sales 34.30% 25.05% 30.34% 24.59% 25.85% 25.32% 19.53% 19.76% 25.59% 25.18%
CFO/Total Assets 23.20% 16.88% 19.38% 16.42% 20.31% 20.92% 15.08% 16.90% 18.64% 18.14%
CFO/Total Debt 23.20% 16.88% 19.38% 16.42% 20.31% 20.92% 15.08% 16.90% 18.64% 18.14%
 ITC LTD - Sales Forecasting ITC LTD - EBITDA Forecasting ITC LTD - EPS Forecasting
Year Weight Year Sales Sales Growth Year Weight Year EBITDA EBITDA Growth Year Weight Year EPS EPS Growth
1 2016A 39192.1 1 2016A 17972.5 1 2016A 9.5
2 2017A 42767.6 9% 2 2017A 19101.2 6% 2 2017A 10.2 7%
3 2018A 43448.9 2% 3 2018A 20281.5 6% 3 2018A 10.7 5%
4 2019A 48339.6 11% 4 2019A 22715.3 12% 4 2019A 12.2 14%
5 2020A 49387.7 2% 5 2020A 23639.3 4% 5 2020A 14.2 17%
6 2021A 49257.5 0% 6 2021A 21528.1 -9% 6 2021A 12.4 -13%
7 2022A 60644.5 23% 7 2022A 25513.7 19% 7 2022A 15.0 21%
8 2023A 70919.0 17% 8 2023A 31440.5 23% 8 2023A 18.6 24%
9 2024A 70866.2 0% 9 2024A 32366.9 3% 9 2024A 19.3 4%
10 2025A 75323.3 6% 10 2025A 32148.0 -1% 10 2025A 18.8 -2%
11 2026E 78214.9 4% 11 2026E 34088.0 6% 11 2026E 20.6 9%
12 2027E 82433.1 5% 12 2027E 35800.2 5% 12 2027E 21.7 6%
13 2028E 86651.3 5% 13 2028E 37512.4 5% 13 2028E 22.9 5%
14 2029E 90869.5 5% 14 2029E 39224.7 5% 14 2029E 24.1 5%
15 2030E 95087.8 5% 15 2030E 40936.9 4% 15 2030E 25.3 5%

FORECASTED SALES GROWTH FORECASTED EBITDA GROWTH FORECASTED EPS GROWTH

5% 9%
5% 6%
5% 5%
5% 5%
4% 5% 4%
6% 5% 5% 5%

2026E 2027E 2028E 2029E 2030E 2026E 2027E 2028E 2029E 2030E 2026E 2027E 2028E 2029E 2030E
Weighted Average Cost of Capital

All figures are in INR unless stated otherwise.

Peer Comps
Debt/ Debt/ Levered Unlevered
Name Country Total Debt Total Equity Tax Rate 1 Equity Capital Beta 2 Beta 3

Hind. Unilever India 1648 552036.49 30.00% 0.30% 0.30% 0.42 0.42
ITC India 284.54 523465.62 30.00% 0.05% 0.05% 0.63 0.63
Nestle India India 3915.47 231190.43 30.00% 1.69% 1.67% 0.30 0.30
Varun Beverages India 2826.25 159032.25 30.00% 1.78% 1.75% 0.77 0.76
Britannia Inds. India 1246.51 133320.6 30.00% 0.93% 0.93% 0.50 0.49

Average 30.00% 0.95% 0.94% 0.52 0.52

Median 30.00% 0.93% 0.93% 0.50 0.49

Cost of Debt Cost of Equity

Pre-tax Cost of Debt 15.81% Risk Free Rate 6.21%

Tax Rate 30.00% Equity Risk Premium 9.12%
After Tax Cost of Debt 11.07% Levered Beta 4 0.64
Cost of Equity 12.04%

Capital Structure Levered Beta

Current Target Comps Median Unlevered Beta 0.49

Total Debt 284.5 0.05% 0.94% Target Debt/ Equity 0.95%
Market Capitalization 5,23,465.6 99.95% 99.06% Tax Rate 30.00%
Total Capitalization 523750.16 100.00% 100.00% Levered Beta 0.64

Debt / Equity 0.05% 0.95% Weighted Average Cost of Capital

1. Tax Rate considered as Marginal Tax Rate for the country Cost of Equity 12.04%
2. Levered Beta is based on 5 year monthly data Equity Weight 99.06%
3. Unlevered Beta = Levered Beta/(1+(1-Tax Rate) x Debt/Equity)
3. Levered Beta = Unlevered Beta/(1+(1-Tax Rate) x Debt/Equity) Cost of Debt 11.07%
Debt Weight 0.94%

WACC 12.03%
Calculation of ROIC Mar-21 Mar-22 Mar-23 Mar-24 Mar-25

Current Assets
Inventories 10,397.0 10,864.0 11,771.0 14,153.0 15,638.0
Trade receivables 2,502.0 2,462.0 2,956.0 4,026.0 4,720.0
Loans n Advances 7.0 11.0 13.0 31.0 1,575.0
Other asset items 4,015.0 6,906.0 7,941.0 4,531.0 4,381.0
Total Current Assets 16,921.0 20,243.0 22,681.0 22,741.0 26,314.0

Current Liabilities
Trade Payables 4,319.0 4,417.0 4,659.0 4,798.0 4,807.0
Advance from Customers 811.0 1,278.0 1,295.0 886.0 -
Other liability items 7,666.0 8,429.0 10,032.0 10,877.0 12,601.0
Total Current Liabilities 12,796.0 14,124.0 15,986.0 16,561.0 17,408.0

Net Working Capital 4,125.0 6,119.0 6,695.0 6,180.0 8,906.0

Non Current Assets

Land 2,889.0 2,829.0 2,830.0 2,865.0 -
Building 8,387.0 9,100.0 9,789.0 10,944.0 -
Plant Machinery 15,307.0 16,912.0 18,480.0 20,718.0 -
Equipments 41.0 44.0 44.0 53.0 -
Furniture n fittings 833.0 907.0 1,000.0 1,068.0 -
Vehicles 180.0 179.0 189.0 192.0 -
Intangible Assets 2,734.0 2,744.0 3,490.0 3,505.0 3,625.0
Other fixed assets 716.0 719.0 786.0 841.0 -
Gross Block 31,087.0 33,434.0 36,608.0 40,186.0 3,625.0
Accumulated Depreciation (7,790.0) (9,204.0) (10,757.0) (12,368.0) -
Net Non Current Assets 23,297.0 24,230.0 25,851.0 27,818.0 3,625.0

Invested Capital 27,422.0 30,349.0 32,546.0 33,998.0 12,531.0

EBIT 19,882.5 23,781.3 29,631.5 30,550.5 30,501.7

ROIC 72.51% 78.36% 91.04% 89.86% 243.41%

Calculation of Reinvestment Rate Mar-21 Mar-22 Mar-23 Mar-24 Mar-25

Net Capex 1,834.0 2,009.0 2,694.0 3,456.0 2,104.0

Change in Working Capital 1,994.0 576.0 (515.0) 2,726.0

EBIT 19,882.5 23,781.3 29,631.5 30,550.5 30,501.7

Marginal Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00%
EBIT(1-T) 14,911.9 17,836.0 22,223.6 22,912.9 22,876.3

Reinvestment 4,003.0 3,270.0 2,941.0 4,830.0

Reinvestment Rate 22.44% 14.71% 12.84% 21.11%

4 Year Average 17.78%

4 Year Median 17.91%

Calculation of Growth Rate Mar-21 Mar-22 Mar-23 Mar-24 Mar-25

Reinvestment Rate 22.44% 14.71% 12.84% 21.11%

ROIC 78.36% 91.04% 89.86% 243.41%
Intrinsic Growth 17.59% 13.40% 11.53% 51.39%

4 Year Average 23.48%

4 Year Median 15.49%
Calculation of PV of FCFF Mar-25 Mar-26 Mar-27 Feb-28 Feb-29 Feb-30

EBIT 41,682.16 48,139.34 55,596.83 64,209.60 74,156.61 85,644.56

Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
EBIT (1-T) 31,261.62 36,104.51 41,697.62 48,157.20 55,617.46 64,233.42
Less: Reinvestment Rate 17.91% 17.91% 17.91% 17.91% 17.91% 17.91%
Free Cash Flow to Firm 25,661.46 29,636.80 34,227.98 39,530.40 45,654.24 52,726.75
Mid Year Convention 0 0.5 1.5 2.5 3.5 4.5
Discounting Factor 1.00 0.94 0.84 0.75 0.67 0.60

PV of FCFF 25,661.46 27,999.95 28,864.18 29,755.08 30,673.48 31,620.23

Expected Growth 15.49%

Terminal Growth 6.50%

Calculation of Terminal Value Sensitivity Analysis

8,08,866.23 11.00% 12.03% 13.00% 14.00%
FCFF (n+1) 60,894.90 5.00% 787067.7 668467.4 584859.2 517669.6
WACC 12.03% 6.50% 998589.4 809392.2 686207.4 592710.3
Terminal Growth Rate 6.50% 7.00% 1104350.3 875045.0 731251.0 624870.6
8.00% 1421632.9 1055223.6 848364.4 705271.2
Terminal Value 1100472.456 9.00% 2056198.1 1354332.1 1024034.6 817832.2

Calculation of Equity Value

PV of FCFF 1,48,912.93
PV of Terminal Value 659953.3
Value of Operating Asset (EV) 8,08,866.23

Add: Cash 4,012

Less: Debt 91
Value of Equity 8,12,787.23
No. of Shares 1,251.41
Equity Value per Share 649.5

Current Share Price 418

Trading at discount -35.64%
Summary
The Discounted Cash Flow (DCF) valuation for ITC Ltd. has been conducted
based on detailed forecasting of the company’s key financial metrics, including
revenue, EBITDA, and free cash flows, for the period FY25 to FY30.
Revenue Projections: Sales are expected to grow from ₹75,323 crore in
FY25 to ₹95,088 crore by FY30, reflecting a stable annual growth trajectory
of approximately 5%.
EBITDA and Earnings: EBITDA is projected to increase from ₹32,148 crore
in FY25 to ₹40,937 crore in FY30. Correspondingly, EPS is forecasted to rise
from ₹18.8 to ₹25.3 during the same period.
Weighted Average Cost of Capital (WACC): Based on the capital structure
and peer analysis, the WACC is estimated at 12.03%, incorporating a cost of
equity of 12.04% and an after-tax cost of debt of 11.07%.
Free Cash Flow to Firm (FCFF): FCFF has been projected using a
reinvestment rate of ~17.91% and is expected to grow from ₹25,661 crore in
FY25 to ₹52,727 crore by FY30.
Terminal Value and Present Valuation: Using a terminal growth rate of
6.5%, the present value of terminal cash flows was calculated to be
₹6,59,953 crore. Including the present value of forecasted FCFFs, the total
enterprise value (EV) stands at ₹8,08,866 crore.
Equity Valuation: After adjusting for net debt and cash balances, the equity
value of the firm is estimated at ₹8,12,787 crore. With an outstanding share
count of 1,251.41 crore, the intrinsic value per share is derived as ₹649.5.

Conclusion
The DCF analysis indicates that ITC Ltd. is currently trading at a significant
discount to its intrinsic value. With the current market price at ₹418 per share,
the valuation suggests the stock appears to be undervalued by nearly 35.64%.
The company’s strong fundamentals, consistent profitability, robust free cash
flow generation, and low leverage make it an attractive investment opportunity.
Based on the assumptions and projections made, ITC appears to be
undervalued in the market and offers considerable long-term value for
shareholders.