ITC

Stays Conservative Amid FMCG Rush for New Brands

is taking a measured approach to acquisitions in India’s personal care market, even as rivals like Hindustan Unilever and Marico aggressively buy venture-backed brands. According to divisional chief executive Sameer Satpathy, ITC prefers to invest selectively in categories where it lacks bandwidth or capabilities, focusing on white spaces with strong consumer trust. The company’s cautious stance contrasts with peers but has not hindered scale in online channels, where premium brands now account for nearly half its portfolio. Acquisition Philosophy - ITC avoids rushing into crowded niches, prioritizing brands with unique strengths. - Past acquisitions like Savlon (2015) and Nimyle (2018) have grown 6–7x in size. - Investments in Mother Sparsh (baby care) and Mylo (mother-focused app) reflect focus on trust-driven categories. - Total investment in Mother Sparsh: ₹126 crore, with full acquisition expected in 2026. Market Context - India’s personal care market: $21 billion in 2023, projected to reach $34 billion by 2028. - Overall CAGR: 10–11%, with online channels expanding at 25% CAGR. - ITC sees enormous headroom for growth, but notes many new brands struggle to sustain presence. Performance and Scale - Mother Sparsh FY25 revenue: ~₹100 crore, up 6x from FY21, though losses stood at ₹13.2 crore. - E-commerce contributes 25% of ITC’s personal care sales. - Premium brands form 43–44% of portfolio value, underscoring ITC’s shift toward higher-margin categories. Strategic Outlook - Baby care identified as a high-trust, high-margin moat, difficult for new entrants to scale. - ITC’s cautious acquisition strategy aims to balance focus, control, and long-term growth. - Other FMCG segments, especially foods, continue to drive more valuation than personal care. - J.P. Morgan values ITC’s Other FMCG business at 6x EV/sales, highlighting investor confidence in selective growth bets.