ITC (ITC)

FairStock Score: 81/100 — SPECULATIVE

Score breakdown: P/E: 2/3 · ROCE: 2/2 · Growth: 1/2 · Dividend: 1/1

Key Financials

Investment Thesis

ITC is a high-ROE, nearly debt-free FMCG stalwart with a 5.75% dividend yield and excellent liquidity, but the near-term quant picture is mixed: mean reversion is neutral, volume imbalance is strongly bearish, and the stock still trades above its Graham number. Fundamentals support quality, but price and volume dynamics argue for patience.

Rating: HOLD (MEDIUM confidence) — 12M horizon

Strengths

• ROE of 49.75% and ROCE of 36.79% with debt/equity of 0.03 show exceptional capital efficiency.
• Dividend yield of 5.75% provides meaningful shareholder returns.
• Liquidity score of 99.7/100 and low market impact make the stock easy to trade.
• Diversified FMCG franchise with strong distribution and cigarette pricing power.
• Nearly debt-free balance sheet supports financial stability.

Concerns

• Reported profit growth of -27.15% contrasts with 27.01% sales growth, raising earnings-quality red flags.
• Current price remains well above the Graham number of Rs.188.97, limiting valuation safety.
• 5-day volume imbalance of -88.5% and 20-day imbalance of -57.1% indicate heavy selling pressure.
• Promoter holding of 0% leaves governance and owner-operator alignment uncertain.
• Quant signals are conflicted and data timing appears inconsistent, complicating near-term interpretation.

AI Analysis

Here is what you need to know about ITC. It is a diversified FMCG name with exceptional returns on capital: ROE around 49.8 percent and ROCE around 36.8 percent, with debt to equity of just 0.03. In plain English, it is a cash machine with almost no borrowings, and it pays a dividend yield of about 5.75 percent. That is the fundamental anchor. On the quant side, the picture is mixed. The earnings momentum signal is strong, but the reported numbers are confusing: one source shows profit growth of 73.02 percent and sales growth of 8.44 percent, while another shows a 27.15 percent drop in profit and 27.01 percent sales growth. That kind of mismatch should make you careful about relying on the growth story. The mean-reversion model says the stock is mean-reverting with a half-life of about seven days, but the z-score is only 0.28. Think of a rubber band that is not stretched—right now there is not much snap-back force. The stock is below its recent 20-day average, so momentum is weak. Volume anomaly is neutral because volume is almost exactly average, but volume imbalance is a red flag: over five days, about 88.5 percent of the imbalance is to the sell side. That suggests institutions may be distributing even though the stock is liquid and easy to trade. On valuation, the Graham number is roughly 189, while the price is around 264 to 278. That means there is no margin of safety; you are paying for quality. The 52-week range from 427 down to 255.5 shows a drawdown of about 40 percent, so risk management matters. For position sizing, I would not be aggressive. Since the edge is not confirmed—mean reversion is flat and volume imbalance is bearish—a half-Kelly approach would point to a very small position, around one to two percent of capital, if any. Over five days, I expect consolidation between 255 and 275. Longer term, this is a hold: great business, but price and near-term volume are not in your favor. I would wait for either a move closer to 240-250 or a clear improvement in volume imbalance before adding.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer