Thread by @MultipieSocial

Hello everyone👋Last week, ITC hosted its 1st ever investor call, but didn't include what existing shareholders wanted to hear- Concrete demerger plans.

A 🧵on- "Will the apparent value unlocking opportunity in ITC, really unlock value"?

First, look at ITC's segment wise contribution in total sales & EBIT:

- Cig. sales consistently declining since the last ~7 yrs.
-Rev. contribution of ex-cigarette segments is significant but the EBIT contribution is not material.

Management is planning to demerge & list- Hotel, FMCG-others & Infotech businesses separately.

This is being conceived as value unlocking for existing shareholders because of notion that there will be multiple expansion in individual segments.

But will there be any difference in the overall M.cap of ITC Ltd even after these businesses are valued individually at higher valuations?

In the table below, we can see that after allocating different multiples to each segment, the upside even in bull case is ~19%.

For new investors, there might be a great potential in new demerged entities based on industry & co. dynamics.

But there seems no such v.attractive opportunity for existing investors even after multiple expansion in each seg, given that entire profit pool is due to cig biz.

Find out the detailed analysis on the "Apparent" Value unlocking opportunity in ITC in our latest weekly newsletter:

#Multipieweekly

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