ITC LTD Fair Value
ITC · Fast Moving Consumer Goods · Current price ₹263.5
Is ITC LTD undervalued?
We estimate the fair value of ITC LTD at ₹500 per share, against a market price of ₹260. That puts the share price about +92.4% below our estimate, at low confidence. This is our view of what the business is worth, not a target price or a forecast of where the share price will go.
How this fair value is calculated
This estimate comes from 2 methods: Fair multiple (P/E) (₹780), Discounted cash flow (2-stage) (₹220). These methods disagree materially, so the estimate is their midpoint rather than a weighted blend, and the disagreement is part of the finding. The full working, including the assumptions and what data was missing, is set out below.
The range around this estimate
Our estimate for ITC LTD spans ₹220 to ₹780. That range is wide, which is the honest signal here: read the range rather than the single number. A margin of safety means buying meaningfully below the estimate: the wider the range, the more room the assumptions leave for error.
How we got this fair value
Every number below is part of the same estimate for ITC LTD. Nothing here is a target price or a forecast of where the share price will go.
The inputs are thin or the models disagree sharply. This is our least reliable kind of estimate, so read the range rather than the single number.
Estimate range ₹220 – ₹780
Why this method for this business
ITC is an asset-light compounder with durable moat and stable earnings power. Relative P/E and DCF are the most appropriate models for valuing its earnings power and intrinsic value.
The models behind the number
These methods disagree materially, so the estimate is their plain midpoint rather than a weighted blend. The disagreement is itself the finding.
Intrinsic value from 2-stage discounted cash flows (primary for asset-light / normal businesses); FCFE path
- peg: Not suitable for a compounder with stable earnings and a wide moat
- relative_pe: Not used as primary model due to its sensitivity to market sentiment and sector volatility
What was missing
- Lack of analyst dispersion data for P/E normalization
- Limited forward estimates for certain periods
- Insufficient data on brand equity and moat quantification
What drives it
27 inputs, grouped by how strong each claim is
- Sector-median P/E
- 39.79×
- Peers used
- 4
- EPS (TTM)
- 15.84 ₹/share
- Own-history median P/E
- 20.26×
- FCF_0 (normalized)
- 15,075 ₹cr
- Net debt
- 2,399 ₹cr
peer-median
peer-median
computed
reconstructed (one feature, dampened — not a cap)
fcf_norm (median ≤5y positive)
gross debt (cash n/a)
- Discount rate (r)
- 12.9%
- Beta
- 0.8
COE (building-block)
bottom-up industry
- Stage-1 start growth
- 9.45%
- Fade shape
- gentle
- Terminal growth (g)
- 5.5%
- Stage-1 years
- 14 y
pat_cagr_5y
lifecycle Cash-Cow
macro terminal × quality premium
lifecycle Cash-Cow horizon
- Term: quality
- +12.5%
- Term: growth
- +6.6%
- Term: capital_allocation
- +8.6%
- Term: financial_strength
- +10.0%
- Term: history
- -14.7%
- Term: sector_rerating
- +0.0%
- Term: rate_regime
- +1.2%
- Term: risk
- +0.0%
- Lifecycle stage
- Cash-Cow
- Quality premium
- 1.1×
quality 80/100 (high, stable returns) → premium
durable ~10% CAGR (ROCE 36% > hurdle) → premium
capital allocation: rising ROCE funded by strong FCF → premium
financial strength: effectively debt-free → premium
history: market paid -49% vs sector, dampened ×0.3 (one feature, not the anchor)
sector re-rating: no sector-norm history → not used
rates: risk-free 6.9% below ~7.1% normal → higher multiple
risk: no analyst-dispersion signal available → neutral (lowers confidence, not PE)
forecast engine (L20)
moat Wide + capital allocation
- Premium vs sector
- +23.7%
- Fair-multiple confidence
- 71%
- Fair P/E
- 49.23×
- Path
- FCFE
- Terminal-value fraction
- 0.417
fundamentals + macro (not capped at own history)
data completeness + term agreement
sector median × ∏(1+term) — Dynamic Fair Multiple
computed (D/E vs 0.8)
PV_TV / (PV_1+PV_TV)
Who computed this
A language model (qwen3:8b) selects the valuation method and the judgement inputs for ITC LTD: which models suit the business, the moat, the growth and margin assumptions. It does not produce the number. The fair value itself is computed in Python by a deterministic engine (version 2026.08.1) from those inputs, so the same inputs always give the same result and every figure above can be traced to a source.
Estimated 14 Sept 2026. Re-run as new financials and news arrive.
How we value stocks
We estimate what a business is worth from its own economics: cash flows, returns on capital, and a multiple justified by its quality, rather than from where the share price has been. A fair value estimate is a view, not a verdict, and it is only as good as the inputs listed above.
Read the full fair-value methodologyMore on ITC LTD
DocStoX estimates are computed from reported financials, for informational purposes only, not investment advice. Consult a SEBI-registered advisor before investing.