Can you share with me some of the key takeaways from the ITC investor meet conducted on 14-December? What was the gist of the meeting outcome?

On 14-December ITC conducted its first investor meet. While the markets were rife with expectations, the announcements were more generic in nature and stopped short of specifics. After all, ITC wanted to catch up on the market cap race, where it currently lags way behind Hindustan Unilever. Here is a gist of what the ITC management said at the investor meet.

· One roadblock to the valuation of ITC was the predominance of cigarettes in profits. While FMCG, hotels and paper contributed generously to the top line, cigarettes continued account for 85% of ITC profits.

· That had become a valuation concern as the high growth FMCG sector that ITC was betting on was not showing enough traction. In addition, cigarette demand globally had been falling and health concerns had hit valuations badly.

· The CEO Sanjiv Puri appreciated the government efforts at cracking down on illegal cigarette sales and also underlined that ITC’s cigarette sales were back at pre-pandemic levels. ITC expects the ambit of cigarette tax to be extended to all tobacco products.

· On the much talked about topic of restructuring the ITC business, the company did drop enough hints without getting into specifics. On the IT business, ITC said it was open to hiving off its IT venture as a separate entity. L&T has done that very successfully.

· Regarding the demerging of the FMCG business and the hotels business, Puri was clear that while it was on the agenda he wanted to see better traction on FMCG and wanted the hotel occupancy rates to get back to pre-pandemic levels.

· ITC has charted out an aggressive plan for inorganic growth in FMCG business. Some of its recent acquisition of brands like Savlon, Nimyle and Sunrise had not only been integrated smoothly but were also driving sales and profits rapidly.

· In terms of future outlays, ITC confirmed that it would be investing an overall sum of Rs.10,000 crore over the next 3 years across major growth vectors and would entail expand the organic capacity as well as inorganic purchases.

· ITC confirmed that 40% of this outlay of Rs.10,000 crore would be spent on expanding the capacity and reach of FMCG business, while 30% of these funds would be allocated to the paper boards business.

· In addition, ITC has also underscored that 10% would be allocated to completing pending hotel projects, while the balance 20% would be earmarked to undertake an aggressive strategy of boosting digital initiatives and ramp up digital capabilities.

The intent appears to be good but markets would want to see more of specific announcements and greater clarity on how ITC intends to go beyond its traditional cigaretes business.