ITC ready for listing of IT arm, M&As in FMCG

Speaking at the event, Chairman Sanjeev Puri said, “The endeavor to achieve double digit growth in both top line and bottom line in the medium term is what investors have been eagerly waiting for. In 2015, ITC had set a target of 1 billion from its consumer business by 2030. Management said Tuesday that the target was “aspirational.” On any action within ITC’s fast moving consumer goods (FMCG) business, Puri did not confirm or speak of any possible demerger, but said nothing is set in stone and the board keeps on evaluating.

Top officials said ITC Infotech Ltd is an area of ​​strong potential and the company is open to merger and acquisition (M&A) opportunities for it. In a presentation uploaded on exchanges after the Virtual Investor Day Meet, ITC also said that it plans to partner startups through direct and indirect investments. The company also reiterated its valuation of the hotel business structure highlighted in FY20, when it pointed to an “alternative structure” aimed at “value creation”.

The company also outlined the capex of approx. 3,000 crore per year, total 10,000 crore in the next three years. “Most of the capital expenditure (35-45%) will go to FMCG to install more lines and improve capacities. The next largest user (about 25%) of capex will be paperboard, which is a capacity-driven growth industry,” according to notes shared by analysts attending the meeting. In its hotel business, ITC sees 10% of capital expenditure. This is likely to decrease in the next three years as the company follows an asset-light model. The company pointed to some improvement in the hotel industry due to better mobility.

Mint had earlier reported that ITC is a wholly owned subsidiary of ITC Infotech, a wholly owned subsidiary providing technology solutions and services to enterprises in industries such as banking and financial services, healthcare, manufacturing, consumer goods and travel and hospitality. subsidiary company.

Analysts have described ITC’s readiness to host the meeting as a welcome move to improve transparency and disclosure levels that have long been demanded by investors. The company’s shares rose last week when ITC said it would hold a meeting.

ITC’s efforts to expand its FMCG business which achieves 22,000 crores every year can also see it getting involved in M&A activity; However, the company will not make any expensive purchases by simply choosing “value-additional” goals. In the past, ITC has acquired brands such as the disinfectant brand Savlon and the floor cleaning product Nimile; Recently, it has added spice brand Sunrise to its portfolio. ,

Within its personal care and hygiene portfolio, ITC will invest in future categories and develop new high-margin opportunities in health and hygiene, skin care and home care. The company said it will also leverage consumer trends to drive innovation in its food portfolio, deep engagement as well as dive into new consumer touchpoints. ITC has listed premiumization as a key growth plan for its food division, which spans brands of packaged wheat flour and cookies.