ITC Limited

Consumer Defensive — Tobacco · NSE

₹263.50−₹0.40 (−0.15%)

DalalBaazaar Score

68 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by high debt relative to equity, falling profits.

In simple words: Strong business and financial position, but sales are shrinking. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of ITC Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

ITC Limited engages in the fast-moving consumer goods, paperboards, paper and packaging, and agri businesses in India and internationally.

IndustryTobacco

SectorConsumer Defensive

Employees22,493

Annual revenue₹78,213 Cr

How does it make money?

Turns over ₹78,213 Cr a year. Of every ₹100 of sales, about ₹26 reaches shareholders as profit, with ₹38 left at the operating level before interest, tax and depreciation. Each of its 22,493 employees supports ₹3.48 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin37.6%

Net margin26.5%

Revenue / employee₹3.48 Cr

Who are its competitors?

The closest listed comparisons in its industry are HINDUSTAN UNILEVER LTD., NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

HINDUSTAN UNILEVER LTD.P/E 42.5x · ROE 21.5%

NESTLE INDIA LIMITEDP/E 59.8x · ROE 79.9%

BRITANNIA INDUSTRIES LTDP/E 44.1x · ROE 51.0%

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 36.5%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 28.5% against a peer median of 51.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE36.5%

ROE28.5%

Peer median ROE51.0%

What is the outlook?

25 analysts covering the stock expect revenue to grow about 8.9% and earnings to grow about 16.0% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+8.9%

Est. earnings growth+16.0%

Analysts25

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +11% while net margin moved -3% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+11%

Margin effect-3%

DalalBaazaar Score

68/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 3.6% — barely ahead of inflation
✗ Profit CAGR of only 2.5%
✗ Latest-year revenue growth of -11.1% is below the longer-term trend — momentum is fading
✗ Profit fell 16.0% in the latest year

Quality vs. Valuation

Company Quality

68/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

67/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

16.6x

3Y Median

25.4x

40 monthly readings · mean 21.6x · range 10.1x–30.9x

Sector Median

44.1x

median of 3 sector peers

🟢Current valuation is approximately 35% below its 3y median of 25.4x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 62% below the peer median of 44.1x.

vs. its own history

Cheap

25.4x median over 40 months · -35%

vs. sector peers

Cheap

44.1x median of 3 peers · -62%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

16.6x

P/B

4.55x

EV/EBITDA

11.3x

PEG

6.56

Dividend Yield

6.07%

What's Good / What's Bad

🟢 What's Going Well3

High return on capital employed
ROCE of 36.5% is the mark of a business that converts capital into profit efficiently.
Valuation below its historical average
At 16.6x the stock trades 35% below its own median of 25.4x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Debt is rising
Total debt is up 683% over 3 years — worth checking what it funded.
Receivables growing faster than sales
Receivables are up 33% against revenue growth of 11% — customers are taking longer to pay.
Inventory building faster than sales
Inventory is up 58% against revenue growth of 11% — stock may not be moving.

Red Flags

4 items require attention · 2 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 683% over 3 years, from ₹306 Cr to ₹2,399 Cr.
🔴High leverageFinancial
Debt/Equity of 3.29x — earnings must service borrowings before shareholders see anything.
🟡Receivables growing faster than salesFinancial
Receivables up 33% against revenue up 11% — sales are being booked faster than they are collected.
🟡Inventory building faster than salesFinancial
Inventory up 58% against revenue up 11% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 36.5% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Priced below its own history
The stock trades 35% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 62% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 3.29x. Interest is payable whether or not the business has a good year.
Sales are being booked faster than collected
Receivables are up 33% against revenue up 11%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Growth barely outpaces inflation
Revenue compounding at 3.6% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 36%✓ 37.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 4% a year✗ 3.6% CAGR
Latest reported year was -11.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹16,281 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 33%✓ 36.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✗ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 2 neutral · 3 weak

Market Cap

₹3.30 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

16.6x

Fair

Fairly valued against the generic band

P/B Ratio

4.55x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹15.84

Profitable

Profitable on a per-share basis

ROE

28.5%

Strong

Strong capital efficiency

ROCE

36.5%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

3.29x

High

High leverage

Revenue Growth (YoY)

-11.1%

Shrinking

Sales are contracting

Profit Growth (YoY)

-16.0%

Falling

Profits are shrinking

Dividend Yield

6.07%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹16,281 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹263.5

P/E (Forward)

15.7x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

24.9%

Good

Healthy core-business profitability

Net Margin

25.9%

Good

Strong bottom-line conversion

Current Ratio

3.04

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.06

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

264.1 / 267.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

45.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹70,245 Cr	₹67,391 Cr	₹74,653 Cr	₹78,213 Cr	+3.6%
EBITDA	₹27,444 Cr	₹27,355 Cr	₹27,898 Cr	₹29,428 Cr	+2.4%
EBITDA Margin	39.1%	40.6%	37.4%	37.6%	—
PAT (Net Profit)	₹19,192 Cr	₹20,459 Cr	₹34,747 Cr	₹20,689 Cr	+2.5%
EPS	₹15.46	₹16.38	₹27.75	₹16.51	+2.2%
ROE	27.8%	27.5%	49.6%	28.5%	—
ROCE	36.0%	33.8%	36.6%	36.5%	—
Total Debt	₹306 Cr	₹304 Cr	₹285 Cr	₹2,399 Cr	+98.6%
Free Cash Flow	₹16,135 Cr	₹13,616 Cr	₹15,348 Cr	₹16,281 Cr	+0.3%

🟢 Revenue has grown at 3.6% a year over 3 years.

🟢 EBITDA has grown at 2.4% a year over 3 years.

🔴 EBITDA Margin has fallen from 39.1% to 37.6% over 3 years (-1.4 pts).

🟢 PAT (Net Profit) has grown at 2.5% a year over 3 years.

🟢 EPS has grown at 2.2% a year over 3 years.

🟡 ROE has held roughly flat at 28.5% over 3 years.

🟡 ROCE has held roughly flat at 36.5% over 3 years.

🔴 Total Debt has grown at 98.6% a year over 3 years.

🟡 Free Cash Flow has been broadly flat over 3 years (0.3% a year).

Balance Sheet & Cash Flow — FY2026

Total Assets

₹93,792 Cr

Total Liabilities

₹20,919 Cr

Total Debt

₹2,399 Cr

Cash & Equivalents

₹643 Cr

Operating Cash Flow

₹18,464 Cr

Capex

-₹2,183 Cr

Shareholding (proxy)

Institutional Holding

52.3%

Insider Holding

29.5%

Corporate Actions

Next Earnings

29 Oct 2026

Dividend Rate

₹16

Ex-Dividend Date

27 May 2026

Analyst Consensus

Recommendations

19 Buy · 13 Hold · 2 Sell

Target Price (Mean)

₹324.73

+23.2% vs CMP

Target Range

₹285 – ₹440

Peer Comparison

Company	P/E	ROE
HINDUSTAN UNILEVER LTD.	42.5x	21.5%
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%

Recent News

1 positive3 mixed1 negative1 general

Cigarette Stock: Should ITC Ltd Split Its Business Into 1:2? What's Smoking In This FMCG Giant?

Goodreturns, 17 Oct

ITC jumps 5% as Citi upgrades rating, target. What prompted bullish view?

Business Standard, 05 OctAnalyst view

🟢Potentially positiveAn analyst opinion changing, which moves the price without changing the business.

ITC Share Price Hits 52-Week Low, Down 4% After 36 Crore Shares Change Hands In Block Deal

NDTV Profit, 08 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

ITC stock falls over 4%, among top Nifty losers as Rs 9,437-crore block deal follows GQG stake sale

Moneycontrol.com, 08 OctOwnership

🔴Potentially negativePromoter selling or pledging is a signal worth understanding, though the reason is often personal rather than about the business.

ITC share price dips 4%, will it bounce back? Experts' view, target price, stop-loss

Livemint, 08 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

ITC shares tumble 4% after reports of ₹9,400 crore block deal: What we know so far

Upstox, 08 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Watch Items

Revenue growth is negative (-11.1%) on the latest reported period — check if this is one-off or a trend.
Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong16.7/20

🟡Financial HealthAdequate12.5/20

🔴GrowthWeak7.5/20

🟢ProfitabilityStrong14.1/15

🟢ValuationAttractive11/15

🟢RiskLow6.5/10

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 36%37.6%
✗Revenue growth stays above 4% a year3.6% CAGR
✓Free cash flow remains positive₹16,281 Cr
✓Debt / EBITDA stays below 2x0.1x
✓ROCE stays above 33%36.5%