Thread by @MlnDollarMinds

Yogesh Mehta from Yield Maximisers on #ITC. He believes the stock could be valued at 35-40x PE in next 3-4 years.

Source - Economic Times

Time for a thread 👇🏻👇🏻

@dmuthuk

@Kiran24Rajput

(1/n)

ITCs balance sheet is distributed 45-55 between cigarette and the non cigarette business.

(2/n)

If with a price hike in cigarette business and a volume growth of ~4%, EBITDA rises by ~8%. It will not be significant on balance sheet but it will be positive because every time in the budget , everyone is expecting sin tax to be increased & that is a burden ITC carries

(3/n)

Tobacco products are out of GST regime but overall ITC is a great company and still available at 20 PE multiples.

(4/n)

There is a valuation gap within peer sector and the growth is more than that of other peer companies but this is only laggard which is pulling valuation down.

(5/n)

2-4 years down the line, the moment we see balance is in favour of non cigarette business than it will have much better valuation to command.

(6/n)

I do not doubt the company can again be valued at 35-40x PE multiple over next three to five years. If not immediately.

(7/n)

In a nut shell, it is a great company with strong balance sheet, good dividend payout and very strong ROE and ROcE and the growth rate is commendable.

(8/8)

@AnyBodyCanFly is projecting #ITC to be a potential 40-50x PE stock in a span of 24 months. 👌