KOLKATA: ITC plans to offer its distribution network, covering all parts of the country through some 4.3 million shops, to startups and smaller FMCG companies that want to go national for a fee to create a new revenue stream, two senior industry officials aware of the development said. The tobacco-FMCG-hospitality major is even open to the idea of acquiring stake in some of these smaller companies, they said.

"The way ITC has a packaging business where it does packaging for rival FMCG brands apart from its own, it also wants to monetise its distribution network," one of them said.

Domestic giant ITC Ltd today said it has not received any communication from the UP government regarding presence of excess lead in its instant noodle brand Sunfeast Yippee.

It said the company manufactures Yippee noodles to the highest standards of safety, hygiene and quality.

Shares of ITC advanced more than 4% on Thursday after US-based investment banking firm Morgan Stanley upgraded the rating, expecting a rise in cigarette volumes and likely hike in cigarette prices next month.

Even as benchmark indices ended down more than 1%, ITC shares settled at Rs 329 on the BSE, up Rs 12.35 or 3.9%–the highest single day jump since December last year as Morgan Stanley assigned an overweight rating on the stock from underweight.

Shares of fast moving consumer goods (FMCG) major ITC have moved higher by 4% to Rs 330 on the BSE on reports that Morgan Stanley has upgraded the stock to ‘overweight’ from ‘underweight’.

The brokerage firm has raised the target price of ITC to Rs 400 from Rs 390, citing benign valuations and earnings expectations, the Reuters report suggests.

At the annual general meeting of cigarettes-to-hotels major ITC on last Friday (July 31), chairman Y C Deveshwar came down hard on what he described as a restrictive regime for the domestic tobacco industry. In the process, Deveshwar informed shareholders of his "back-up" plan — a diversification exercise he initiated over a decade ago — to derisk the cigarette business. The latter gives ITC 40 per cent of its revenues and 85 per cent of its profits.

This initiative, which is a foray into fast moving consumer goods (called FMCG others by the company; here referred to as FMCG), is becoming critical to ITC as regulatory and taxation issues impact cigarette volumes.

Diversified group ITC has set a target of garnering a revenue of Rs 1 lakh crore by 2030 from its FMCG business, as it looks to increase presence in the segment, company's chairman Y C Deveshwar said today.

At present, revenue from FMCG business stands at around Rs 9,000 crore.

ITC Ltd on Thursday posted a subdued 3.61 per cent rise in net profit at Rs 2,265.44 crore for the first quarter ended June 30, due to pressure on cigarette sales and sluggish demand for other FMCG products.

The Kolkata-based company had posted a net profit of Rs 2,186.39 crore during the same period of 2014-15 fiscal.

Shares of ITC have dipped 3% at Rs 301 on the National Stock Exchange (NSE) ahead of its April-June quarter (Q1) results tomorrow.

Analysts on an average is expected the cigarettes major will report 10% year-on-year (YoY) increase in net profit at Rs 240 crore and single digit growth in net sales at Rs 945 crore for the recently concluded quarter.

Indicating the polarisation of the stock market, country largest FMCG maker ITC is now trading at an all-time high discount to its smaller peers in the benchmark Nifty. Hindustan Unilever (HUL) and Asian Paints are now trading at more than twice the price to earnings multiples of ITC. The tobacco to FMCG major is now trading at 26x its net profits in the trailing 12-months. In comparison, HUL now commands a valuation ratio of 53.5x while Asian Paints has become one of the most expensive stocks in the index with a price-earnings multiple of 55x. (See the chart).

A day after the Gujarat government banned Sunfeast Yippee noodles and Bambino macaroni in the state, ITC, maker of the former, said it was not informed or allowed to present its position on the matter.

"We would like to categorically state that the company has not received any communication from the state authorities regarding the levels of lead in Sunfeast Yippee noodles being higher than the permissible limit," an ITC statement said. "We are deeply pained that no opportunity was given to the company to explain its position as required by law."

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