ITC: FMCG Is Growing Up - While the Stock Gets CheaperITC LimitedNSE_DLY:ITCstouflacrucoITC has fallen from roughly ₹490 to around ₹279, pushing the stock into one of its deepest long-term momentum resets in years. What makes the setup interesting is the contrast: the Master Buy Scanner V2 sees excellent business quality and attractive valuation, while the monthly technical signal still says WATCH. Master Buy Scanner V2 — Monthly Score: 2/3 Action: WATCH Decision: WATCH BUY state: NO EVENT Entry quality: WEAK — 35% Position size: NONE — 0% Top recent: YES WT cross: NO Band 1: RED Combined: GREEN 5/10 Bands synchronized: NO Cycle: ACTIVE WT1 / WT2: -64.44 / -62.18 The important part is how deeply oversold momentum has become. Both WT lines are already below the scanner's lower accumulation zone. But oversold is not the same as BUY. There is still no bullish WT cross, Band 1 remains red and synchronization is missing. The cycle is active, but the actual entry trigger has not fired. So this is currently a watchlist setup rather than an actionable signal. The underlying business remains extremely profitable ITC finished FY2026 with gross revenue of approximately ₹80,867 crore, +10.1%, while EBITDA increased 4.9% to ₹25,208 crore. EPS reached ₹16.20. The scanner reflects this: Business quality: 3/3 — 100% Return on capital: 28.96% Margin trend: +0.42% Profitability measure: 29.03% Cash-generation measure: 21.83% This is therefore not a distressed company requiring a turnaround simply to remain profitable. FMCG diversification continues to improve The long-term story is increasingly about ITC becoming more than a cigarette company. Between FY2020 and FY2026, ITC's FMCG-Others business delivered approximately 11% annualized revenue growth and 27% annualized growth in segment profit. Its portfolio now includes brands across staples, biscuits, snacks, noodles, personal care and increasingly health-focused categories. Consumer spending across ITC's FMCG portfolio exceeded ₹37,000 crore in FY2026. The newer digital-first and organic portfolio—including Yoga Bar, 24 Mantra, Mother Sparsh, Prasuma and Meatigo—grew revenue 60% YoY, reaching an annual revenue run-rate above ₹1,350 crore. Margins are also improving: Q4 FY2026 FMCG-Others EBITDA margin reached 11% excluding Sresta, +200 bps YoY. That diversification is important because it gradually reduces the dependence of the investment thesis on tobacco. But cigarettes remain both the cash engine and the biggest risk Cigarettes remain a critical source of ITC's profitability. Between FY2020 and FY2026, cigarette segment revenue compounded at roughly 7% annually, with segment profit growing around 6%. The challenge is regulation. India sharply increased cigarette taxation from February 1, 2026. ITC warns that higher taxation can increase the price gap between legal and illicit cigarettes, potentially hurting legal volumes and market economics. That is probably one of the most important risks to the current thesis. ITC's diversification is working—but tobacco still matters enough that regulatory changes can materially affect earnings expectations. Valuation looks increasingly interesting The scanner gives ITC an excellent 5.5/6 valuation score — 92%: Business-price multiple: 12.43 Cash-flow multiple: 19.78 Earnings multiple: 17.61 Profit/share: ₹15.84 Debt-to-equity: 0.03 The near-zero leverage is particularly attractive. ITC also maintained its shareholder-return policy, declaring a total FY2026 dividend of ₹14.50 per share versus ₹14.35 the prior year. Its dividend policy targets roughly 80–85% of profit after tax over the medium term. So at current levels, the thesis combines a strong balance sheet, cash generation and shareholder distributions with a significantly compressed share price. Growth is the weaker part of the setup The scanner gives the growth outlook only 2/4, including expected future profit growth of -0.98%. That fits the broader picture. ITC is not currently a high-growth compounder. Cigarette taxation is a headwind, Agri results can be volatile, and the Paperboards business has faced pressure from low-priced imports, although Q4 profit improved 21% YoY. The investment thesis is therefore more: quality + cash generation + improving FMCG mix + reasonable valuation than: rapid earnings growth. Key technical levels Immediate support: ₹275–280 Major support: ₹250–260 First resistance: ₹300–310 Recovery confirmation: ₹320–330 Major resistance: ₹360–380 Structural recovery zone: ₹400+ The current momentum reading is extremely depressed, but I want the chart to do one thing before becoming more aggressive: produce the monthly WT cross. Ideally, that would occur alongside Band 1 turning green and full band synchronization. My classification: QUALITY VALUE WATCH ITC currently offers: 3/3 business-quality score 29% return on capital Minimal leverage Strong cash generation Attractive dividend profile Improving FMCG profitability 92% valuation score Extremely oversold monthly momentum But technically: No WT cross. Band 1 red. No synchronization. No BUY event. That is why I like the stock considerably more than the current 35% entry-quality score, while still respecting the signal. Current verdict: WATCH — the valuation is interesting, but wait for the monthly turn. What would you do? A) Start small around ₹280 B) Wait for the Master Buy Scanner BUY C) Wait for a recovery above ₹310 Master Buy Scanner V2: Not financial advice.