Why Is Company Performance Not Reflecting On ITC Share Price?

Addressing the 110th annual general meeting on Wednesday, chairman and managing director Sanjiv Puri said that the company was concerned about the share price not appreciating even on the back of good performance.

Supporting his claim with numbers, Puri said, “If we take FY17 to FY20, our EPS has gone up by 47 per cent, our return on capital employed has gone up from 61 to 72 per cent, our margins on FMCG have improved by 640 bps.”?

The debt-free company has paid out nearly?Rs 50,000 crore?as dividend in the last five years. ITC posted a consolidated net profit of Rs 3,343.44 crore in the quarter ended June 30, 2021, up 30.24% from a???12,567.07 crore in the same quarter last year. Gross revenue stood at Rs. 12,884.45 crore, representing a growth of 36.6% y-o-y.?

However, acknowledging the issue with share price, Puri said that the market was not reflecting the company’s performance.?

The conglomerate, which has a prominent presence in the cigarette, FMCG and hotel industry, took a beating during the COVID-ravaged FY21. Puri, however, highlighted that the company had done a “terrific” job to recover well from the pandemic blow. In its annual report, the company also said that strong sequential recovery momentum in cigarettes led to volumes reaching nearly pre-Covid levels in Q4 FY21.

The company is also looking to review its organisational structure from time to time. Puri hinted at the possibility of demerger or merger of businesses along with the listing of IT arm ITC Infotech. At the same time, with respect to the hotel industry, Puri added that it wasn’t the right time to look at an alternative structure right away and would wait for recovery. An alternate structuring was something the company had said it was looking into last year in a bid to create value for the hotel vertical.

Chiming into the digital wave in agriculture, the company would be launching an app called ITC MAARS or 'Metamarket for Advanced Agriculture and Rural Services' this year for small farmers, offering them agricultural solutions. Hyperlocal services, AI-based advisories and online marketplaces are some of the buzzwords being attached to the app.?

Puri also outlined the “ITC Next Strategy” for the shareholders and said that the company will continue to explore opportunities to come up with disruptive business models.