At 11:52 AM, the ITC share price was down 3.18% and was trading at ₹420.10. The company has recently come in the news after the British American Tobacco Company decided to sell a stake from it. Despite this, ITC Limited still remains a popular stock among Indians, especially those planning their retirement. This isn't just about its past but its strategic evolution and solid financial performance. Here, we will look at key reasons behind why ITC remains a strong choice for Indians’ retirement portfolios.
Read more on: ITC Block Deal: BAT to Offload Over 2% Stake in FMCG Giant ITC
A major draw for retirement investors is ITC's impressive track record of rewarding its shareholders. The stock, which traded at just ₹1 at the end of 1991, now trades around ₹300-₹400.
Beyond stock appreciation, the company has paid out a massive cumulative dividend of nearly ₹19,000 crore to its shareholders over the last two decades.
Additionally, ITC has issued two bonus shares: a 1:2 bonus in 2005 and a 1:1 bonus in 2010, effectively increasing shareholder holdings without additional investment. This history of consistent returns and shareholder-friendly actions makes ITC a much safer bet compared to speculative investments.
Historically, ITC has been synonymous with cigarettes, with this business contributing a dominant 80% to its total revenues a decade ago. However, ITC has been consciously working to reduce this dependency. Today, the tobacco business contributes less than 40% to its overall revenue.
This significant shift is due to ITC effectively reinvesting the cash generated from its cigarette business into rapidly growing sectors like fast-moving consumer goods (FMCG), agribusiness, and hospitality. This strategic diversification makes ITC a more balanced and sustainable long-term investment.
Recently, ITC has also been in the news for the proposed demerger of its hotels business. This strategic move is aimed at unlocking value for shareholders and allowing each business segment to pursue its growth strategies independently. This further reinforces ITC's commitment to enhancing shareholder wealth and focusing its efforts on core areas.
ITC is not just diversifying; it's building businesses that are designed to generate substantial long-term returns. Whether it's the wide range of products in its FMCG division or its expanding chain of hotels, the company is making investments today that are expected to yield significant benefits for many years to come. These are not short-term initiatives but strategic moves to create lasting value.
ITC has achieved a leadership position in most of the sectors it operates in. It is a dominant force in the cigarettes and paper business in India. In the hospitality sector, it stands among the top three players. Furthermore, in the competitive FMCG space, ITC is rapidly gaining market share with popular brands in high-demand categories such as biscuits, salty snacks, noodles, and personal care products. This widespread leadership across various industries demonstrates the company's strong management and market understanding.
ITC's strategic pivot away from an over-reliance on tobacco, its focus on building long-term growth businesses across diverse sectors, its proven leadership positions, and its consistent history of rewarding shareholders make it a compelling component for many Indian retirement portfolios. Its ability to adapt and generate value positions it as a resilient choice for those planning their golden years.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
Published on: May 28, 2025, 12:32 PM IST
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