Target: ₹341
CMP: ₹258.90
As per exchange filing, ITC informed that the company intends to buy a 10.07-per cent stake in Blupin Technologies Private Ltd, a D2C Web and app-based content-to-community-to-commerce platform, not exceeding ₹39.34 crore.
Founded in 2017, Mylo, a full-stack community eco-system focused on the parenting journey of young families, raised seed capital from Fosun RZ Capital in November 2018. Today, Blupin, in its Series-B funding, raised about $17 million from six investors, including ITC, with revenue size of ₹1.39 crore in FY21.
Moreover, Mylo addresses the needs of its consumers (problem-solution) through a wide and relevant range of social content, health tools, conversations and community-sharing features. Though it’s a small acquisition, we believe it would strengthen its mother and baby care offerings.
ITC has been focusing on acquisitions recently by investing in the fast-growing D2C space for mother and baby care segment. Though the current acquisition of Mylo at a price of ₹39.34 crore remains small, we noticed ITC’s investment underlines the clout of D2C brands in India’s $110-billion FMCG market.
We remain positive, retain Buy with a DCF-based TP ₹341 (implying 23.3x FY24E EPS).
Key risks: Sharp increase in any form of taxation, higher leaf tobacco prices, and delayed recovery in the economy.