Measuring Company Value - A Deep Dive into ITC Ltd’s Credit Profile

By -

In the intricate world of finance, measuring a company's value extends beyond the simplistic view of market capitalization. The credit profile, an often overlooked aspect, plays a pivotal role in painting a comprehensive picture of a company’s financial health and stability. Today, we delve into the credit profile of ITC Ltd., as presented on Bloomberg.



ITC Ltd., renowned for its diverse portfolio, boasts an ICRA short-term rating of A1+. This rating is indicative of the company's robust financial standing and low credit risk. However, it is essential to dissect this further to understand its implications fully.


The Bloomberg Default Risk (DRSK) provides insights into ITC’s default risk with a 1-year default risk at IG1 and 14 short term at A1+. These ratings are instrumental in gauging the company’s ability to meet its short-term financial obligations.


Now, let’s pivot our focus towards relationship rating and amount to raise. The relationship rating is integral in evaluating the rapport and trust level between creditors and the company. A high level of agreement amongst banks or contributors underscores confidence in the company's financial prudence.


ITC Ltd.'s credit benchmark composites trend remains unchanged over six months, reflecting stable financial performance. However, it is not subscribed to Company Consensus (IG2), which could potentially limit its perspective on broader market sentiments.


So what are the consequences? 

  • A stable outlook from CRISIL coupled with AAA long term unsecured debt signifies low investment risk but also implicates conservative growth projections. 
  • The non-subscription to Company Consensus might limit diversified insights impacting strategic decision-making.


In conclusion, while ITC Ltd.’s robust ratings underscore its financial prowess, diversifying insights through varied subscriptions and focusing on enhancing relationship ratings can augment its holistic market value exponentially.


Comments

Post a Comment

Popular posts from this blog

Performance Management at ITC: A Journey from EVA to a Balanced Approach

By -
Rethinking Performance Management In the dynamic world of business, performance management systems play a crucial role in driving organizational success. ITC Limited (ITC), a leading Indian conglomerate, has undergone a remarkable transformation in its performance management approach, transitioning from a sole focus on Economic Value Added (EVA) to a more comprehensive system that encompasses both financial and non-financial metrics. EVA: A Brief Overview EVA, a financial performance measure developed by Stern Stewart & Co., gained popularity in the 1990s as a tool to assess a company's profitability relative to its cost of capital. While EVA offered certain advantages, it faced criticism for its narrow focus on short-term financial gains and its potential to overlook critical non-financial aspects of business performance. ITC's Transition from EVA Recognizing the limitations of EVA, ITC embarked on a journey to revamp its performance management system in 2008. The ...
Read more

Sunrise for Shareholders: How ITC's M&A Strategy Delivers Eight-Fold Value

By -
Image
ITC's acquisition of Sunrise Foods serves as an example of how its M&A approach complements its ESG and value octagon objectives, ultimately generating value for investors. Here is a deeper look into it - Market Standing and Profitability: Enhanced earnings and market share: Acquiring Sunrise Foods' devoted clientele broadens ITC's sphere of influence and fortifies its standing in the food industry. more market share and maybe more revenue from cross-selling or upselling current products to the new clientele result from this. Increased margins: ITC may be able to save costs and increase margins by utilising Sunrise Foods' well-established sales channels or effective production methods. Financial Stability and Productivity: Operational synergy: ITC may reduce redundancies, improve logistics, and optimise resource allocation by merging Sunrise Foods' processes with its own. As a result, there is an increase in financial stability through increased efficiency and c...
Read more

ITC Financial Performance Analysis: A Comprehensive Overview

By -
Image
ITC, one of India's leading diversified conglomerates, has witnessed remarkable financial growth in 2023 compared to 2022. This blog delves into a comprehensive analysis of ITC's financial performance, highlighting key metrics and their implications.   Key Financial Highlights   NOPAT (Net Operating Profit After Tax) Increase : ITC's NOPAT witnessed a significant 28.6% surge from 2022 to 2023, indicating enhanced operational efficiency and profitability.   EVA (Economic Value Added) Growth : EVA, a measure of a company's true economic profit, experienced a substantial 53.3% increase, demonstrating ITC's ability to generate superior value for its shareholders.   EVA Spread Improvement : EVA Spread, a measure of EVA efficiency, rose by 4.27%, suggesting that ITC is effectively utilizing its resources to generate EVA.   ROIC (Return on Invested Capital) Enhancement : ROIC, a measure of a company's profitability relative to its investments, improved by 1...
Read more