Synopsis:
ITC is in focus as it and PepsiCo, along with PE firms like TPG and Temasek, are eyeing a 10 percent stake in Balaji Wafers, valuing the snack maker at nearly Rs 40,000 crore.
The shares of this leading FMCG company are in focus after it eyes acquiring a key snacking business, which has a dominant position in western and central India. In this article, we will dive more into the details
With a market capitalization of Rs 5,21,234 crore, the shares of ITC Ltd made a day high of Rs 416.80 per share, up by 0.43 percent from its previous day closing price of Rs 415 per share. Over the past five years, the stock has delivered a positive return of 126 percent.
About the news
According to reports, ITC and Pepsico, along with several private equity firms such as TPG and Temasek, are potentially competing for a 10 percent stake in leading snacks maker, Balaji Wafers, at a potential valuation of around Rs 40,000 crore.
Pepsico in 2013 was interested in buying a 49-51 percent stake in Balaji Wafers; however, the promoter of the snacks major wasn’t interested during that time. It is the second attempt by PepsiCo to acquire a stake in Rajkot-based Balaji Wafers, which has a strong presence in western and central India.
In FY24, Balaji Wafers reported a revenue and net profit growth of 11 percent and 41 percent, respectively. In FY24, it reported a revenue of Rs 5,453.7 crore and a net profit of Rs 578.8 crore.
If this deal is closed, then it will give significant advantages to the snacks segment of both companies, as these companies face huge competition from the domestic players.
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Financial Highlights
ITC’s revenue for Q1 FY26 came in at Rs 21,495 crore, up by 21 percent from Rs 17,778 crore in the same quarter last year. Additionally, on a sequential basis, revenue grew by 15 percent from Rs 18,765 crore in Q4 FY25.
Coming to its profitability, the company reported a net profit growth of 3 percent to Rs 5,343 crore in Q1 FY26 as compared to Rs 5,177 crore in Q1 FY25. However, on a QoQ basis, it recorded a sharp plunge of 73 percent from Rs 19,808 crore, due to extraordinary value from the demerged hotel segment.
The company has delivered an ROE and ROCE of 27.32 percent and 36.79 percent respectively, and is currently trading at a low P/E of 26x as compared to its industry average of 53x.
Written by Satyajeet Mukherjee
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