ITC Analyst Meet Update - A Good Beginning: ICICI Securities
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ICICI Securities Report
Though ITC Ltd. is 'well-covered' by consensus, whether it is 'well-understood' has always remained a question – which got addressed in the first-ever analyst meet. Key messages, in our view, are -
mergers and acquisitions as an incremental vector for growth (while ITC always had the ability, we reckon now it also has the willingness),
profitable growth mindset in foods,
it is pursuing the category creation route for growth in home and personal care (it believes that this is cheaper than chasing share gains),
emphasis on return on capital employed focus in hotels,
11% of volumes are from new launches (capsules, 'lights' variants etc., in our view) and 100 plus launches in last five years,
ITC (also) has cluster-based integrated approach (originally popularised by Hindustan Unilever Ltd. as 'winning in many Indias' strategy),
40% increase in direct distribution reach to 2.5 million over 2016-2021 (largely similar to HUL).
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