Corporate Valuation Project Report

Valuation and Strategic Synergy Analysis: ITC’s Investment in Farmley

Shrutika Ruia PGP/28/169

Sarvabouma Reddy PGP/28/140

Shubhra Anand PGP/28/171

Kiranmayi Maddukuri PGP/28/143

Dilip Kalyani PGP/28/320

1
Index
Executive Summary​ 3
Company Profiles​ 4
Rationale and Strategic synergies​ 6
ITC Valuation Approach​ 7
Farmley Valuation Approach​ 8
WACC Assumptions and Calculation​ 9
Deal Structure and Options​ 10
Synergies and Revenue Upside​ 11
Consolidated Impact​ 12
Appendix​ 13

2
Executive Summary

ITC Limited, a diversified conglomerate with Valuation is carried out using a combination of
leadership in FMCG, has consistently expanded its methodologies: segment-wise growth projections and
portfolio beyond tobacco into food, personal care, and sales-linked estimates for ITC, and revenue multiples
health-focused categories. With strong financial for Farmley based on comparable transactions and
stability, a wide distribution network of over 7 million peer benchmarks. The value of synergies is explicitly
outlets, and robust free cash flows, ITC is well incorporated into cash flow projections, with ITC’s
positioned to scale new-age consumer brands and call option on the remaining stake providing
capture the growing health-conscious consumer long-term strategic upside. Overall, the deal is
segment. Farmley, founded in 2017, is a fast-growing expected to be strategically transformative and
clean-label snacking brand with 80+ SKUs across dry financially accretive, positioning ITC to capture the
fruits, trail mixes, and preservative-free snacks. structural shift towards health and wellness in the
Having built a strong presence in e-commerce and Indian FMCG market.
D2C, Farmley is now looking to expand into modern
trade and general trade channels but requires scale,
offline distribution, and supply chain efficiencies to
sustain momentum and defend its competitive
position.

The proposed transaction involves ITC acquiring an

initial 51% stake in Farmley through primarily debt
financing, with an option to acquire the remaining
49% after three years based on performance
milestones. This staged approach gives ITC
operational control and early access to synergies,
while preserving flexibility and mitigating the risk of
overvaluation. The merger creates clear strategic and
operational synergies: ITC will strengthen its
health-forward FMCG portfolio and leverage
Farmley’s digital-native brand positioning, while
Farmley will gain access to ITC’s procurement scale,
distribution muscle, and advanced R&D capabilities.
Financial synergies are expected in the form of lower
sourcing and logistics costs, margin expansion, and
accelerated revenue from offline retail access, while
non-financial synergies include enhanced digital
presence, stronger consumer credibility, and
alignment with ESG practices.

3
Company Profiles supported by value-added exports (spices, aqua,
nicotine derivatives). Paperboards & Packaging
ITC Limited​ remains resilient with 7% growth in FY26E,
ITC has demonstrated consistent growth across its supported by décor and sustainable packaging, while
diversified business segments, with FMCG emerging Hotels continue their recovery with double-digit
as the central driver of long-term expansion. growth, aided by strong occupancies and expansion
Cigarettes remain a steady cash generator, into leisure destinations.
contributing to profitability, while FMCG–Others
(branded packaged foods, personal care, and Forward projections suggest Cigarettes will maintain
stationery) has recorded double-digit growth over the a steady 6–7% CAGR, FMCG–Others will grow at
last five years. In FY2025, ITC’s FMCG segment ~10–12%, Agri Business in mid-to-high teens, and
registered strong performance, supported by Paperboards & Packaging at ~8–10%. These
Aashirvaad, Sunfeast, Bingo!, Fiama, and Savlon, and diversified drivers ensure ITC’s overall revenue
continued scaling of its health-focused brands like CAGR remains in the high single digits, with FMCG
Yoga Bar. Hotels and Paperboards also delivered emerging as the second growth engine beyond
margin expansion, while ITC Infotech contributed to cigarettes.
digital services growth. Backed by robust free cash
ITC Product Segments​
flows, the company maintained a low debt-to-equity
ratio and continued its tradition of rewarding Segments FY25 Share
shareholders through consistent dividends. Going FMCG - Cigarettes 44%
forward, segment-wise projections suggest sustained FMCG - Others 30%
growth in FMCG (high teens), moderate recovery in Agri Business 27%
Hotels and Agri, and stable margins in Paper & Paperboards, Paper & Packaging 11%
Packaging, consolidating ITC’s leadership position in Hotels -​
Indian consumer markets. Others ~0%
ITC Revenue Drivers​
ITC’s revenue base is diversified across Cigarettes, Farmley​
FMCG–Others, Agri Business, Paperboards & Farmley, though a relatively young brand founded in
Packaging, and Hotels. Cigarettes remain the largest 2017, has delivered impressive growth with a revenue
contributor (40–42% of revenues) and continue to CAGR of ~25–30% over the last three years, led by
deliver steady mid-single-digit growth supported by strong traction in e-commerce and D2C channels. The
premiumisation and stable taxation. FMCG–Others, company’s clean-label positioning and innovative
which includes packaged foods, personal care, and SKUs such as trail mixes, roasted snacks, and
digital-first acquisitions (Yoga Bar, Mother Sparsh, preservative-free pastas have resonated with urban
Meatigo, 24 Mantra), is growing at a high single to millennials and health-conscious families. While
low double-digit CAGR (~10–12%), driven by online platforms like Amazon, Flipkart, and Blinkit
premium products, new-age channels, and scaling remain the largest revenue contributors, Farmley has
digital-first brands (~₹1,000 Cr ARR). Agri Business recently expanded into modern trade and is piloting
has shown strong momentum with 25% YoY growth its presence in general trade and exports. Despite
in FY25 and further 39% growth in Q1FY26, rapid top-line growth, Farmley’s margins remain

4
modest due to high logistics and marketing costs. Integration with ITC is expected to create revenue
With ITC’s backing, Farmley’s growth trajectory is synergies in three forms: (1) expanded offline
projected to accelerate, with revenue gains expected presence through ITC’s 7M+ retail outlets, (2)
from deeper offline penetration, cross-brand cross-brand promotion with Aashirvaad, Sunfeast,
promotions, and lower input costs through ITC’s and Bingo!, and (3) premiumisation through stronger
supply chain efficiencies. Over the next three years, marketing and brand positioning. These synergies
channel-wise projections highlight faster growth in drive an additional ~18–20% uplift in revenues,
modern trade and general trade, balancing the supported by ~9% COGS reduction and ~11%
e-commerce-heavy model into a true omnichannel savings in marketing and supply chain costs. As a
presence. result, Farmley’s revenue CAGR improves from
~30% standalone to ~35–40% post-acquisition, with
Farmley Revenue Drivers​ significant margin accretion
Farmley’s revenue model is channel-driven, with
strong traction across e-commerce (~35% of FY25
revenues), quick commerce (~38%), modern trade Farmley Product Segments
(~11%), general trade (~14%), and institutional/other Channels FY25 Share
channels (~3%). Historically, Farmley has delivered
E-Commerce 35%
~25–30% revenue CAGR, but projections indicate
Quick Commerce 38%
acceleration when synergies with ITC are
Modern Trade 11%
incorporated. Without synergies, total revenue is
General Trade 14%
expected to grow from ₹370 Cr in FY25 to ~₹1,578
Others 3%
Cr by FY30, representing a ~30% CAGR. With
synergies, revenue is projected to scale faster,
reaching ~₹2,006 Cr by FY30, implying a ~35%
CAGR. Rationale and Strategic synergies

Channel growth highlights include: The proposed acquisition of Farmley by ITC is driven
by a shared vision to capture the rapidly expanding
●​ E-commerce: CAGR ~20–25% through health and wellness snacking market in India, a
FY30, with leadership in marketplaces like segment growing at double-digit compound annual
Amazon and Flipkart. growth rates (CAGRs), far outpacing traditional
●​ Quick Commerce: Strongest driver with snacking. Structural shifts such as urbanization, rising
~30–36% CAGR initially, supported by disposable incomes, and increased consumer focus on
Blinkit, Zepto, and Instamart partnerships. nutrition and sustainability are fueling this
●​ Modern Trade: CAGR ~8–10%, reflecting transformation.
gradual offline penetration.
●​ General Trade: Fastest scaling offline While ITC has established scale, distribution, and
channel, with CAGR ~30–35%, enabled by credibility as one of India’s largest FMCG players,
ITC’s distribution backbone. Farmley contributes agility, digital-native branding,
●​ Others (institutions, airports): Remain a and strong consumer connect in the clean-label
small contributor (~3% of revenues). snacking space. Together, the acquisition enables a

5
combination of portfolio diversification, accelerated modern trade.​
market penetration, and profitability enhancement.
●​ Margin Uplift: Integration with ITC’s
Market Opportunity agri-sourcing, procurement scale, and logistics
network is expected to improve Farmley’s
●​ The Indian health-snacking market is valued
gross margins from ~35% to ~45–48%, while
at USD 4 billion, expected to grow at 3.5x the
EBITDA margins are projected to expand
rate of traditional snacking.
from ~5–8% to ~15–18%.
●​ Online orders for healthy food and snacks
grew 60% year-on-year in FY25, with Strategic Fit for Farmley
Tier-III cities registering 90% growth.
●​ Farmley generated ₹370 crore in FY25 ●​ Scale and Credibility: Partnering with ITC
revenues, with targets of ₹600–700 crore in provides Farmley access to capital, large-scale
the near term and aspirations of crossing supply chain infrastructure, and established
₹1,000 crore within three years. R&D capabilities, reducing its overhead
●​ Competitors such as True Elements (₹76 crore burden and accelerating product innovation.
FY24 revenue, +33% YoY) and Tata Soulfull ●​ Offline Penetration: Farmley can leverage
(₹95 crore FY24 revenue, +48% YoY) are ITC’s pan-India footprint across Tier-2 and
scaling, but Farmley’s 80–90 SKUs and Tier-3 cities, where its digital-first approach
omnichannel presence position it ahead of alone may not have been sufficient.
peers. ●​ Sustainability and ESG Leverage: ITC’s
strong ESG credentials, traceability in
agri-sourcing, and focus on sustainable
packaging add credibility to Farmley’s
clean-label promise, resonating with modern
Strategic Fit for ITC consumers.
●​ International Expansion : Farmley can tap
●​ Portfolio Diversification: ITC’s FMCG into ITC’s global presence across 90+
growth strategy has consistently focused on countries to accelerate exports of its
moving beyond its core tobacco business into clean-label snacks. With strong demand for
food, personal care, and wellness. Farmley healthy products in markets like North
offers a complementary high-growth product America and the Middle East, ITC’s trade
portfolio that strengthens ITC’s hubs provide a ready platform for scaling
health-forward positioning alongside earlier international sales without heavy new
acquisitions like Yoga Bar (2023) and investments.
Mother Sparsh (2022).
●​ Channel Expansion: Farmley’s e-commerce Learning from ITC’s Past M&A Moves​
and D2C strengths plug into ITC’s relatively ITC has a track record of acquiring high-potential
weaker digital presence, while ITC’s offline niche FMCG brands and scaling them profitably:
distribution scale of over 7M outlets allows
Farmley to expand rapidly into general and

6
 ●​ In 2023, ITC acquired 100% of Sproutlife stability. EBITDA margins are assumed to
Foods (Yoga Bar), strengthening its nutrition remain high at 60–62%.
and health-forward offerings. ●​ FMCG – Others:​
●​ In 2022, ITC picked up a 26% stake in The FMCG-Others segment (packaged foods,
Mother Sparsh, a D2C mother and baby care personal care, stationery, and recent
brand, furthering its strategy in premium acquisitions such as Yoga Bar and Mother
personal care. Sparsh) is the second growth driver.
●​ These acquisitions highlight ITC’s approach Projections assume a CAGR of 10–12%,
of selectively targeting digital-first, supported by premiumisation, expansion into
high-growth brands and providing them with modern trade, and scaling of digital-first
the distribution, sourcing, and financial brands​
muscle required for sustainable scaling ITC Limited Revenue Drivers​
. Margins are forecast to improve gradually
ITC Valuation Approach from 9–10% to 12–13% by FY30, reflecting
operating leverage and portfolio mix
The valuation of ITC Limited was undertaken using a
improvements.
Discounted Cash Flow (DCF) methodology, with
●​ Agri Business:​
explicit segment-level forecasts for revenue and
The Agri segment has shown strong
operating margins, followed by the derivation of free
momentum with 25% YoY growth in FY25
cash flows. This approach is appropriate for a
and 39% growth in Q1 FY26. With
diversified conglomerate such as ITC, where
value-added exports (spices, aqua, nicotine
individual segments have distinct growth and margin
derivatives) scaling rapidly, near-term growth
trajectories. To ensure robustness, results were further
is assumed at 15–20%, moderating to 12% by
cross-checked with trading multiples of large-cap
FY28 as the base expands​
FMCG peers.
ITC Limited Revenue Drivers​
1. Segmental Revenue and Margin Forecasts . Margins are forecast to stabilise at 8–9%.
●​ Paperboards, Paper & Packaging (PPP):​
Segment-level projections were developed based on Growth is projected at 8–10% CAGR, driven
historical performance, industry outlook, and ITC’s by capacity expansion in décor/specialty
stated strategy: papers and increased demand for sustainable
packaging​
●​ Cigarettes:​ ITC Limited Revenue Drivers​
Cigarettes remain ITC’s largest contributor, . Margins are expected to remain resilient at
accounting for 40–42% of consolidated 20–22%, supported by cost initiatives and
revenue. Forecasts assume a CAGR of 6–7% import duty protections.
over FY25–30, reflecting volume recovery, ●​ Hotels:​
premiumisation benefits, and stable taxation. The Hotels business is projected to grow in
The rollout of the Union Budget 2025 Track double digits (12–14% CAGR) as
and Trace mechanism is expected to reduce post-COVID recovery continues, aided by
illicit trade, further supporting volume expansion in leisure and business travel.

7
 Margins are forecast to improve from 18–20% in the financial model (covered in a separate
to 25% by FY30 with rising occupancy and subsection).
operating leverage.
3. Enterprise and Equity Valuation

The present value of projected FCFF plus terminal

value results in an Enterprise Value of
approximately ₹6.2 lakh crore (as per the DCF
(ITC) sheet). Given ITC’s negligible consolidated
debt, the Equity Value is broadly equivalent to the
Enterprise Value. This valuation output is consistent
with ITC’s prevailing market capitalisation of ₹5.2
lakh crore, based on a share price of ₹414 and 1,250
crore shares outstanding.

4. Peer Multiples Cross-Check

To validate the DCF results, ITC’s implied multiples

were compared with those of listed FMCG peers. ITC
currently trades at 22x EV/EBITDA and 25x P/E on
FY25 estimates. This is broadly in line with
Hindustan Unilever, which trades at 24–25x
EV/EBITDA and 27–30x P/E, and with Nestlé India,
which commands even higher valuations at 28–30x
EV/EBITDA and 30–35x P/E. Dabur and Britannia
fall in the range of 20–24x EV/EBITDA and 25–28x
P/E. The analysis confirms that ITC’s valuation is
consistent with industry benchmarks, though it trades
2. Cash Flow Modelling at a modest discount relative to pure-play FMCG
peers due to its diversified portfolio and continued
●​ Forecast Period: FY25–30
reliance on cigarettes.
●​ Free Cash Flows to Firm (FCFF): Derived
from segment-level EBIT, adjusted for Farmley Valuation Approach
depreciation, capital expenditure, and working
capital requirements (sourced from the DCF The valuation of Farmley has been derived primarily
(ITC) and supporting schedules in the Excel using the revenue multiple approach, benchmarked
model). against recent funding rounds in the FMCG and
●​ Terminal Value: Estimated using a perpetual healthy snacking segment. The methodology involves
growth rate of 5%, consistent with long-term applying revenue multiples observed in comparable
nominal GDP growth expectations for India. transactions and funding rounds to Farmley’s
●​ Discount Rate: Applied using ITC’s weighted projected revenues.
average cost of capital (WACC), as calculated

8
From the Series C funding round in 2025, Farmley In terms of acquisition structuring, ITC’s acquisition
was valued at approximately INR 944 Cr, of a 51% stake corresponds to a consideration of INR
corresponding to a revenue multiple of around 4.67x. 996 Cr (without option), with the balance 49%
This multiple, consistent with sector peers such as structured as an option exercisable in FY28. This
True Elements, Yogabar, and Paper Boat, was taken results in an implied total enterprise valuation of
as the baseline for valuation. Multiplying this INR 1,952 Cr, reflecting both the control premium
sector-derived multiple with Farmley’s FY24 revenue and strategic synergies expected.
from operations results in an implied valuation of
INR 944 Cr for FY24. The valuation also highlights the creation of goodwill
of INR 1,587 Cr, with a book value of equity at INR
365 Cr (FY26E) and minority interest recognized at
INR 957 Cr. The option price associated with the
remaining 49% stake has been estimated at INR 179
Cr, aligning the acquisition structure with long-term
strategic intent.

WACC Assumptions and Calculation

To benchmark Farmley’s valuation and assess

acquisition returns, the Weighted Average Cost of
Capital (WACC) was computed, reflecting both the
cost of equity and the after-tax cost of debt in
proportion to the assumed capital structure.

Cost of Equity (Ke):​

The Capital Asset Pricing Model (CAPM) framework
was applied:

Ke=Rf+β×(Rm−Rf)Ke=Rf​+β×(Rm​−Rf​)

●​ Risk-Free Rate (Rf): The yield on 10-year

Government of India securities, approximately
7.1% as of FY25, was considered as the
For the FY25 valuation, transaction comparables
risk-free benchmark.
were additionally considered, capturing industry
●​ Market Risk Premium (Rm – Rf): A
precedents in strategic acquisitions and control
premium of 6.5% was adopted, reflecting
transactions. Incorporating these benchmarks,
long-term empirical averages for the Indian
Farmley’s valuation for FY25 is estimated at INR
equity market.
1,727 Cr. Further, adjusting for a control premium of
●​ Beta (β): Since Farmley is privately held, an
13% (based on median premiums in India), the
industry unlevered beta of 0.85 (FMCG and
post-premium valuation stands at INR 1,952 Cr.
packaged foods peers) was taken and

9
 re-levered for the assumed debt-to-equity ratio This valuation includes a control premium over
of 0.3, resulting in a levered beta of 1.05. Farmley’s standalone valuation from its most recent
funding round. The transaction results in recognition
Accordingly: of goodwill, reflecting the premium paid above the
book value of Farmley’s net assets, which will be
Ke=7.1%+1.05×6.5%≈13.9%Ke=7.1%+1.05×6.5%≈1
consolidated into ITC’s financial statements. This
3.9%
upfront investment ensures ITC’s ability to integrate
Cost of Debt (Kd):​ Farmley operationally, achieve synergies, and
Borrowing costs were assumed at 9.5%, in line with exercise strategic control from the outset.
recent sector transactions and ITC’s credit profile.
In the second stage, ITC has secured an option to
Post tax adjustment (effective corporate tax rate of
acquire the remaining 49% stake in FY28. The option
25.2%), the after-tax cost of debt is:
has been independently valued at ₹179 crore using an
Kdafter−tax=9.5%×(1−25.2%)≈7.1%Kdafter−tax​=9.5 option pricing framework that incorporates expected
%×(1−25.2%)≈7.1% revenue growth, margin expansion, and market
conditions at the time of exercise. This design
Capital Structure:​ provides ITC with the right, but not the obligation, to
Based on Farmley’s financing profile and sector complete the acquisition once Farmley has matured
norms, a debt-to-equity ratio of 30:70 was assumed. further. If exercised, the total transaction
consideration would amount to approximately ₹1,175
WACC Computation: crore.

WACC=(EE+D×Ke)+(DE+D×Kdafter−tax)WACC=( This two-stage approach serves multiple objectives.

E+DE​×Ke)+(E+DD​×Kdafter−tax​) For ITC, it minimizes upfront capital outlay while
still securing majority ownership and operational
Substituting values:
control. It also defers a portion of the acquisition cost
WACC=(70%×13.9%)+(30%×7.1%)≈11.9%WACC=( until Farmley’s performance and integration benefits
70%×13.9%)+(30%×7.1%)≈11.9% are proven, thereby reducing execution risk. For
Farmley’s promoters and investors, the structure
Final Assumption: For valuation purposes, a WACC preserves continuity in management and provides a
of ~12% was applied. Sensitivity tests were further clearly defined exit pathway in the medium term.
conducted in the range of 11%–13% to validate the
robustness of valuation outcomes. Overall, the transaction structure, combining a
controlling stake with an embedded call option on full
Deal Structure and Options ownership, reflects a balanced and strategically
aligned design. It allows ITC to phase its investment,
The acquisition of Farmley has been structured in two capture synergies early, and secure flexibility to
stages to combine immediate control with long-term achieve complete ownership when Farmley’s growth
flexibility. potential has been realized.

In the first stage, ITC will acquire a 51% controlling

stake in Farmley at an acquisition cost of ₹996 crore.

10
Synergies and Revenue Upside Cost and Margin Synergies

Market Position and Strategic Fit Cost and margin improvements will arise from
procurement, supply-chain integration, and marketing
Farmley is a digital-first, health-snacking brand with efficiencies. ITC’s agri-sourcing network is expected
approximately 80 to 90 SKUs spanning nuts, seeds, to reduce Farmley’s raw material costs by
dry fruits, trail mixes, and makhanas. Its FY25 approximately 9% of sales. Consolidated
revenue was about ₹370 crore, with a short-term warehousing and distribution will reduce logistics and
target of ₹600–700 crore and a stated ambition to supply-chain costs, while ITC’s scale in ATL and
achieve ₹1,000 crore within three years. Farmley BTL advertising will lower marketing spend intensity
derives 35% of its revenue from e-commerce, 38% by about 11% of sales. These drivers support
from quick commerce, 11% from modern trade, 14% EBITDA margin expansion from 8–10% on a
from general trade, and the remainder from stand-alone basis to 15–17% post-acquisition by
institutional and other channels. This channel mix FY28.
highlights strong digital traction but limited offline
penetration. ITC’s acquisition addresses this gap by Quantified Financial Impact
leveraging its extensive retail network, agri-sourcing
expertise, and established export channels. The The quantified effect of these synergies is set out
strategic fit lies in portfolio diversification, below. All figures are expressed in Indian rupees (₹
distribution expansion into Tier-2 and Tier-3 cities, crore).
margin expansion through scale, and acceleration of
●​ Stand-alone FY25 revenue: ₹370 crore
international ambitions.
●​ Projected stand-alone FY28 revenue: ₹1,150
Revenue Synergies crore (based on 25–30% CAGR)
●​ Projected post-acquisition FY28 revenue:
The principal revenue synergies include distribution ₹1,600 crore (based on 35–40% CAGR)
expansion, cross-brand promotion, and ●​ Incremental revenue by FY28: ₹450 crore
premiumisation. ITC’s 6.5 million retail outlets and ●​ Stand-alone EBITDA margin: 8–10%
strong trade relationships can increase Farmley’s ●​ Post-acquisition EBITDA margin: 15–17%
offline penetration manifold. Cross-brand promotion ●​ Stand-alone FY28 EBITDA: ₹115 crore
opportunities exist in integrating Farmley products ●​ Post-acquisition FY28 EBITDA: ₹250 crore
into ITC’s existing portfolio, such as Aashirvaad, ●​ Incremental EBITDA by FY28: ₹135 crore
Sunfeast, and Bingo, which will boost adoption and
trial rates. Premiumisation through ITC’s marketing These projections indicate that ITC’s acquisition of
capabilities, packaging upgrades, and expanded Farmley will be both top-line accretive and margin
placement supports higher average selling prices. accretive, strengthening the FMCG-Others portfolio
Together, these levers are expected to accelerate and enhancing ITC’s long-term growth trajectory.
Farmley’s revenue CAGR from 25–30% on a
Consolidated Impact
stand-alone basis to 35–40% in the first three years
post-acquisition. The acquisition of Farmley has a material impact on
ITC’s consolidated balance sheet and financial

11
performance. The consolidated financial statements ₹2,024 crore in FY25 to about ₹2,090 crore by
reflect the recognition of goodwill, the inclusion of FY29E.
Farmley’s assets and liabilities, the recognition of a
non-controlling interest, and the treatment of the call Non-current and Current Assets​
option on the remaining stake. Total non-current assets had increased significantly,
from approximately ₹44,253 crore in FY25 to about
₹48,237 crore in FY27E, driven largely by goodwill
recognition. Current assets, including inventories,
also expand as Farmley’s operations are integrated.
Inventories had increased from ₹15,061 crore in
FY25 to more than ₹22,900 crore in FY29E,
reflecting both organic growth and the addition of
Farmley’s working capital requirements.

Option Valuation​
The option to acquire the remaining 49% stake in
FY28 is recognized as a financial instrument on ITC’s
consolidated balance sheet. From FY27E onwards,
this option is carried at a value of approximately ₹179
crore, reflecting the fair value of the contractual right
to purchase the remaining equity.

Equity and Minority Interest​

As ITC owns 51% of Farmley post-acquisition, a
non-controlling interest representing the remaining
49% is recognized in consolidated equity until the
option is exercised. Upon exercise in FY28, the
minority interest will be eliminated and Farmley’s
Goodwill and Intangibles​ financials will be fully consolidated under ITC’s
The initial acquisition of a 51% stake for ₹996 crore ownership.
results in goodwill being recognized in ITC’s
consolidated balance sheet. Goodwill increases from P&L Consolidation​
₹577 crore in FY25 to approximately ₹2,164 crore in From FY25 onwards, Farmley’s revenues and
FY27E and remains at this level through FY29E. This EBITDA are consolidated into ITC’s financial results.
increase represents the acquisition premium paid over Farmley’s reported revenues of approximately ₹370
Farmley’s book value and is subject to periodic crore in FY25 are projected to rise to around ₹1,600
impairment testing in accordance with accounting crore by FY28 under ITC’s ownership, contributing
standards. Other intangible assets also rise as significantly to ITC’s FMCG-Others segment.
Farmley’s brand and proprietary product formulations EBITDA margins are expected to expand from
are consolidated, increasing from approximately 8–10% on a stand-alone basis to 15–17% with

12
synergies, generating incremental consolidated mley-narrows-losses-to-24-crore-for-fy24-plans-retail
EBITDA of about ₹135 crore by FY28. -expansion/[Link]

Overall Impact​ Economic Times. (2025, July). Majority Indian

The consolidated financial statements demonstrate consumers now prefer preservative-free snacks:
that the acquisition is both strategically and Farmley. The Economic Times.
financially accretive. The balance sheet impact is [Link]
visible through the creation of goodwill, recognition roducts/food/majority-indian-consumers-now-prefer-
of an option asset, and the addition of Farmley’s preservative-free-snacks-farmley/articleshow/122839
working capital. The income statement impact is [Link]
reflected in higher consolidated revenues, stronger
EBITDA margins, and the accretion of earnings to Economic Times. (2025, July). ITC lines up Rs
ITC’s FMCG-Others segment. On completion of the 20,000 crore capex, aims to improve FMCG margins.
second stage in FY28, ITC will achieve full The Economic Times.
ownership of Farmley, eliminating minority interest [Link]
and consolidating the entire enterprise value. roducts/fmcg/itc-lines-up-rs-20-000-crore-capex-aims
-to-improve-fmcg-margins/articleshow/122911975.c
Appendix ms

Economic Times. (2025, May). Snack brand Farmley Economic Times. (2025, May). ITC Hotels Q4
raises $40 million in funding led by L Catterton results: FY25 PAT at Rs 698 crore, revenue at Rs
3,333 crore. The Economic Times.
[Link] [Link]
ealthy-snacking-brand-farmley-bags-40-million/articl news/itc-hotels-q4-results-fy25-pat-at-rs-698-crore-re
eshow/[Link]?from=mdr venue-at-rs-3333-crore/articleshow/[Link]
Inowert. (2024, May) Equity Risk Premium Economic Times. (2025, May). ITC Q4 results:
Adjusted PAT rises 3% YoY to Rs 5,155 crore; Rs 7.85
[Link]
per share dividend declared for FY25. The Economic
Economic Times. (2025, July). Healthy snacking Times.
brand Farmley aims to double revenue to Rs 600–700 [Link]
crore in FY26. The Economic Times. earnings/itc-q4-results-adjusted-pat-rises-3-yoy-to-rs-
[Link] 5155-crore-rs-7-85-per-share-dividend-declared-for-f
food/healthy-snacking-brand-farmley-aims-to-double- y25/articleshow/[Link]
revenue-to-rs-600-700-cr-in-fy26/articleshow/122767
FoodBev Media. (2025, May). Farmley secures $42M
[Link]
Series C funding to expand in India’s healthy
Hindu BusinessLine. (2025, [date]). Farmley narrows snacking sector. FoodBev Media.
losses to Rs 24 crore for FY24; plans retail [Link]
expansion. The Hindu BusinessLine. -series-c-funding-to-expand-in-india-s-healthy-snacki
[Link] ng-sector

13
ITC Limited. (2025). Report and accounts 2025. ITC
Limited.
[Link]
accounts-2025-activity-7346037996867022849-7dW
v

International Trade Centre. (2023). ITC annual report

2023. ITC.
[Link]
Annual_Report_2023_webpages.pdf

BW HealthcareWorld. (2025, May). Makhana tops

India’s healthy snack choices: Farmley report 2025.
BW HealthcareWorld.
[Link]
-tops-indias-healthy-snack-choices-farmley-report-20
25-564031

Economic Times. (2025, March). Health-focused food

brands clock revenue gains on back of quick
commerce, wider reach. The Economic Times.
[Link]
y/health-focused-food-brands-clock-revenue-gains-on
-back-of-quick-commerce-wider-reach/articleshow/12
[Link]

14