Risk and Return Analysis of ITC Limited - An Empirical Study

Abstract

Investment is an employment of cash on assets with an aim of getting return in the form income or capital appreciation. The expectation of return varies from investors to investors based on their level of risk tolerance. The variability in actual return from expected return is termed as risk. Fast Moving Consumer Goods (FMCG) industry is a defensive industry as the consumption of daily use products continues even during the adverse economic situation. ITC Limited is a well-known brand for its cigarette business, but it also has a spread in various other businesses like FMCG, Hotels, Packaging, and Agri-business. Since the cigarette business being the core revenue generating business for ITC, the increase in tax rate imposed by the government created the image among the public that cigarette business is an anti-society business which may harm the well-being of the people. This could be the reason for the volatility in the price of ITC’s stock. This research paper aims to discuss the risk & return of ITC’s stock with respect to the Market Index-NIFTY and to explore the reasons why ITC Limited is underperforming in the long run.

Keywords: Return, Risk, and Volatility

View PDF