Hidden Gem of ITC ๐Ÿ’Ž

One of the retailers favourite stock ITC has one hidden gem (ITC Infotech) and the company is considering the demerger of ITC Infotech. ITC Infotech is likely to be valued at Rs 20,000-25,000 crore.

Some of the interesting facts and information regarding ITC Infotech :

Source : investywise

It is looking at the revenue of 3000 Cr this FY

Itโ€™s EBITDA margin and profits are growing pretty well - Margins are up from 12.9% to 25.2% and Profit after tax is up from 209 to 451 Crores

Screenshot from 2021-11-21 20-24-23

It will be interesting to see if demerging ITC infotech and potentially listing it separately will unlock value for shareholders of ITC.

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Is the news confirmed about the demerger. Six months back there were many experts thinking that there could be a demerger of units, but then I read somewhere the Charirman said that it would not be feasible. Hope the demerger happens

Discl: I am invested in ITC.

EDIT: Mint has reported this news.

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I never understood why stock is underperforming this much โ€ฆhardly given any returns stock wise for many years. when there are good triggers like this? is something wrong with the stock which we donno ?

Not an expert but following the stock closly as I am invested in it. Few of the experts say the reason for the under performance is due to the following:-

  1. Unable to allocate Capital efficiently. This is the main reason quoted by Saurabh Mukerjea and hence his PMS sold ITC. At the same time, he acknowledges that ITC is one of the massive cash generating company in India.
  2. Due to the pandemic, their hotel business was kind of closed most of last year. However, inspite of this, their financials are great due to cash generated from their cigaratee business.
  3. Due to ESG becoming prominent, many of the FII will not invest in this company thought it is a cash generating machine due to ther Cigaratee business.
  4. There is so much cash that the company is generating, which according to few analyst is not deployed efficiently.

These are few of the points, repeating, not an expert, these are things which I have heard from.

My personal view, I will stick on to this cash generating business. The company generates tons of cash and most of this cash they are giving it away as dividends. The dividend yield is 4.5% which is higher than the bank SB rates. It is indeed a gem.

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