1/N
ITC Snapshot
For co's with stable cash flows (pricing power), starting PE is the biggest driver of future returns. Notice how between '92-'97 negative returns despite 25% p.a. profit Growth. Reverse was true between 2002-07. 27% p.a. returns despite 18% p.a. PAT growth
ITC Snapshot
For co's with stable cash flows (pricing power), starting PE is the biggest driver of future returns. Notice how between '92-'97 negative returns despite 25% p.a. profit Growth. Reverse was true between 2002-07. 27% p.a. returns despite 18% p.a. PAT growth
2/N
My speculation over the next 5-10 yrs
1. Cig+Hotels div profits grows 7% - 10% p.a.
2. FMCG profits to see J curve. Rev expectation of 50k - 70K with 10 -15% PAT margins (Management goal 1Lakh cr rev by '30)
3. Range of outcoumes from 25K (no FMCG J curve) - 40K profits
My speculation over the next 5-10 yrs
1. Cig+Hotels div profits grows 7% - 10% p.a.
2. FMCG profits to see J curve. Rev expectation of 50k - 70K with 10 -15% PAT margins (Management goal 1Lakh cr rev by '30)
3. Range of outcoumes from 25K (no FMCG J curve) - 40K profits
3/N
4. Dividend Payout ratio to remain 80-85%
5. Exit PE between 15x - 30x
6. Entry price of 180/- (Div of 9/- in May'20)
The Net results is as follows
4. Dividend Payout ratio to remain 80-85%
5. Exit PE between 15x - 30x
6. Entry price of 180/- (Div of 9/- in May'20)
The Net results is as follows
So it's very likely that ITC returns over the next few year will be between 15-20% p.a. with conservative assumptions
Current starting PE gives a decent "Margin of safety"
@contrarianEPS
@unseenvalue
@shyamsek
@deepakshenoy
@dmuthuk
Current starting PE gives a decent "Margin of safety"
@contrarianEPS
@unseenvalue
@shyamsek
@deepakshenoy
@dmuthuk
