For years, ITC has been synonymous with cigarettes. But behind the scenes, the company has quietly spent the last two decades building a second engine, one powered by biscuits, shampoo sachets, frozen snacks, and luxury hotels. And now, with tobacco regulations tightening and ESG pressures mounting, that second engine is being asked to do the heavy lifting.
The transformation isn’t just a corporate ambition anymore. It’s showing up in the balance sheet.
In FY24, ITC clocked ₹70,866 crore in revenue and ₹20,422 crore in net profit. Its cigarette business continues to be the biggest contributor, both in absolute revenue and margins. But the FMCG (non-cigarette) vertical is now bringing in ₹21,002 crore in gross revenue, with profits before tax touching ₹1,790 crore.
It’s a strong number for what was once considered a side bet. But here’s the thing it still hasn’t changed the growth narrative.
Because despite the acquisitions and brand launches, revenue growth in FY24 was flat at -0.91%. Yes, net profit grew 8.9%, and return metrics like ROCE (37.75%) and ROE (29.47%) remain healthy. But there’s no step-change in growth. There’s no breakout moment—yet.
And that’s where investor sentiment has started to shift.
The company is stable and debt-free, with over ₹6,000 crore in cash on the books, strong free cash flows, and a dividend yield of 3.25%. It doesn’t need to take big risks. But the flip side of that stability is this: growth has to come from execution, not financial engineering.
To its credit, ITC is trying to stack the FMCG pipeline with future-facing bets.
Take 24 Mantra Organic. It gives ITC a ready-made entry into India’s ₹10,000 crore organic food market, one that’s growing at 15–20% a year. From health oils to pulses and packaged snacks, it fits well with ITC’s existing distribution muscle. Then there’s Mother Sparsh, a D2C baby care brand in the clean-label space, and Ample Foods, which makes ready-to-eat frozen snacks.
Each of these moves makes strategic sense. They tap into high-growth niches. But they’re also still very small.
24 Mantra’s revenue for FY24 was just ₹306 crore. Mother Sparsh: roughly ₹110 crore. Even if both double in size, they won’t move the needle just yet. These are long-tail bets, not front-loaded accelerators. And that’s what the market is watching for, proof of scale, not just strategy.
Because right now, ITC’s future still hinges on one big question: can it convert brand presence into growth momentum?
Structurally, the company looks well-positioned. Cigarettes continue to fund the FMCG push. Hotels, now demerged, are finally contributing profits without dragging on margins. The paper and packaging vertical remains quietly profitable. And ITC’s agri business provides backend strength few others can match.
Even ITC Infotech, often overlooked, has been quietly scaling its B2B software services, offering a digital layer to the company’s increasingly tech-forward supply chain.
But all of this needs to translate into topline acceleration and that hasn’t happened consistently yet.
And that’s why, even with all these moving pieces, ITC’s stock is down 12% YTD and trades at ~26x earnings. That multiple doesn’t look expensive at first glance. But in a market that’s becoming impatient with value stories, it still prices in a lot of hope.
Especially when peers like HUL and Nestle who’ve also faced demand slowdowns are still defending their premium segments and finding ways to grow.
So is ITC still worth holding on to?
Yes, but with expectations that are grounded, not stretched.
It’s a rare Indian conglomerate that’s clean, capital-efficient, and actively trying to modernise without losing its core. But for all its strategic clarity, the real test is yet to come.
Because at some point, brands need to show up in the numbers. And investors won’t wait forever.
