For years, ITC was the stock that got no love.
It had a dominant cigarette business, threw off tons of cash, and paid steady dividends. But to investors, it felt... boring. The FMCG bets weren’t paying off fast enough. Hotels were a drag. And the stock just didn’t move. From 2015 to 2020, ITC gave almost no returns — while peers like HUL and Nestle raced ahead.
Then something changed.
Since 2020, ITC’s stock has quietly climbed 245%. In five years, it’s gone from an unloved defensive to a top performer on the Nifty. And in January 2025, the company posted its best-ever quarterly profit — all while pulling off a major corporate restructuring.
So what flipped the switch?
Let’s start with the business itself.
For decades, ITC was seen as a cigarette company dabbling in everything else. That wasn’t entirely wrong. Even today, cigarettes bring in less than 40% of total revenue — but nearly 75% of operating profit. And despite heavy taxation and regulatory heat, ITC still commands 80% of India’s legal cigarette market. It launched premium variants, cracked down on illicit trade, and kept cash flowing through its core.
But the bigger story is what it’s done outside of cigarettes.
ITC’s FMCG segment has finally grown up.
It’s still not as profitable as its tobacco engine, but the scale is real. Household brands like Aashirvaad, Yippee, Bingo, Savlon and Fiama now clock ₹21,000+ crore in revenue — up from just ₹6,500 crore in FY15. The margins, once razor-thin, are inching up too. In Q3 FY25, FMCG EBITDA margin hit 8.5%, and the company is pushing for double digits. Premiumisation is part of the plan — from roasted flour and gourmet snacks to high-end soaps and frozen foods. This isn’t just a volume game anymore. It’s a value game.
And then came the hotel demerger.
In January 2025, ITC carved out its hotel business into a new listed entity, ITC Hotels Limited. Shareholders got 1 hotel share for every 10 ITC shares, and the parent retained a 40% stake. It was a long-awaited move. Hotels were capital-intensive, cyclical, and underperforming. By spinning them off, ITC freed itself to focus on higher-return segments — while giving investors direct access to a pure-play hospitality stock. The timing helped too. Travel is back, weddings are booming, and ITC Hotels posted a 43% profit jump last quarter.
Meanwhile, the agri and paper divisions continue to hum in the background.
Agri is more than just a tobacco supply chain now. The company is ramping up exports of spices, coffee, and even pharma-grade nicotine. It’s not flashy, but it’s steady. Paper, on the other hand, is under pressure — soft demand, rising wood costs, and cheap imports from ASEAN markets have eaten into margins. Still, ITC is investing in sustainable packaging and new capacity to stay relevant.
And through it all, the balance sheet has remained bulletproof.
ITC is debt-free, sitting on over ₹6,000 crore in cash, and generating ₹17,000+ crore in operating cash annually. It returned ₹13.75 per share in dividends last year — with a payout ratio above 80%. It’s also investing heavily: ₹20,000 crore in planned capex across FMCG, agri, and paper.
So is this the perfect business?
Not quite.
Cigarettes still drive profits — and any GST hike or ESG pushback could hurt. FMCG margins are improving, but not yet at par with global peers. And while hotels are now independent, there’s still no word on when ITC might unlock value from its IT services arm, ITC Infotech, or spin off FMCG as a standalone.
But the market sees a company that’s doing more than just coasting on tobacco profits.
It sees a business that’s cleaned up, restructured, and ready to grow.
