ITC Ltd: ITC’s IT venture steadily becoming too big a part to ignore for investors

MUMBAI: For years, traders have saved a hawk eye on the event of ITC’s non-cigarette FMCG enterprise, a section the corporate thought of its development engine and a solution to diversify from the low development legacy enterprise of producing and promoting cigarettes.

The June quarter earnings of the conglomerate, nonetheless, demonstrated that there could also be one other subsidiary that should be on traders’ radar going forward.

ITC Infotech, a wholly-owned subsidiary of the corporate, has raised some eyebrows with the sharp surge in its income development and profitability over the previous two years and the advantages it’s reaping from change in administration.

Within the quarter ended June, the data expertise subsidiary reported a 21 per cent development in revenues to Rs 696 crore and a 79 per cent rise in working revenue to Rs 196 crore. ITC Infotech’s annual working revenue has risen practically five-fold since 2018-19, whereas its internet revenue has climbed over five-fold in the identical interval.

“Along with the rising profitability of FMCG, enchancment in IT is notable, and might provide incremental upsides,” stated brokerage agency

Companies in a current be aware.

With main Indian IT sector firms proclaiming the daybreak of a brand new age for the sector led by digital transformational offers, cloud computing, synthetic intelligence and software-as-service, ITC Infotech has a tailwind to proceed its double-digit development trajectory.

It’s seemingly that the IT enterprise of the cigarette producer may find yourself being its quickest rising subsidiary and one other means to decrease the dependence on the tobacco enterprise.

Brokerage agency

says even in 2022-23, the cigarette enterprise will command 82 per cent of the conglomerate’s working revenue as in comparison with 85 per cent in 2019-20.

ITC itself is realizing the rising profile of the data expertise arm throughout the conglomerate as is obvious from the dedication of two pages to the subsidiary within the June quarter investor presentation. The identical subsidiary discovered no point out in previous investor shows or earnings press releases of the corporate.

“The corporate will proceed to deal with increasing its presence in strategic accounts, creating and successful massive transformation alternatives, sharpening its domain-specific digital options throughout recognized,” ITC stated of its subsidiary within the annual report for 2020-21.

Brokerage Kotak Institutional Equities has assigned a price of Rs 10 per share to the IT subsidiary of ITC. At a price-to-earnings a number of of 27 instances previous 12-month earnings, it’s valued at a steep low cost of 20-25 per cent to its friends within the IT sector that’s prone to slender because it outperforms the sector going forward.

ITC Infotech contributed merely 5 per cent to ITC’s general working revenue within the June quarter, but when the aggressiveness of the brand new administration bears dividend, the non-cigarette FMCG enterprise received’t be the one development engine in ITC’s wagon. | ITC Ltd: ITC’s IT enterprise steadily turning into too huge a component to disregard for traders


Inter Reviewed is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button