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ITC becoming 3M of India

sagar ramamurthy's picture
Submitted by sagar ramamurthy on April 20, 2010 - 21:39

Those who know 3M a multinational who does big business with small things. It sells post it paper and sctoch brite for home and office cleaning..things like glue and tape. But it does big business with good profit. 3M is present all over the world with market cap of 60 Billion.

Now why am I talking about 3M . My thought process is that ITC is taking a route of 3M in india. It's selling small stuff that cost 20-50 Rs but in big quantities. Most recently ITC started classmate series of pencil and pen products , papers etc. It's already in business of food oil , agriculture in addition to hotels and cigarette.

ITC with market cap of 25B , is trying to achieve what 3M did all over the world. Made strong brand that sells in big volume.

Now the big question. ITC with revenue of less than 5 Billion is more valuable than 3M with revenue of 24 Billion.

That tells you how expensive the market is ?

3M has big portfolio of strong brands that you see on day to day basis. MMM generates cash from operations that's more then ITC revenue.

I know , I know ..you will argue that at what rate 3M is growing vs ITC. So if you put 20% growth rate for next 5 years still ITC won't be able to get to this revenue level in next 5 years.

I can't really tell if ITC is a good buy , but if you have access to NY exchange 3M is a steal at these level.


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