PPFCF holdings ITC PPFCF holdings PPFAS Mutual Fund FMCG Contrarian investing Rajeev Thakkar

ITC at PPFCF

From WebNotes, a public knowledge base. Last updated 16 May 2026. Reading time ~12 min.

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ITC Limited is among the most studied and most discussed domestic holdings of the Parag Parikh Flexi Cap Fund (PPFCF). The position is widely treated as the canonical illustration of PPFAS contrarian investing on the Indian side of the portfolio: a multi-year build during a period of consumer-staples underperformance and persistent environmental, social and governance (ESG) scepticism around cigarettes, followed by a sharp re-rating that lifted ITC into the top three weights of the scheme.

During one disclosure period in 2025 ITC was the second-largest equity holding in PPFCF at 7.99 per cent of net assets, sitting between Amazon at PPFCF at 8.51 per cent and Alphabet at PPFCF at 7.08 per cent. The fund team at PPFAS Mutual Fund had built the position over multiple factsheet cycles when the stock was widely shunned for its tobacco exposure and its perceived inability to monetise the non-cigarette FMCG, hotels, paper and agribusiness segments at attractive return on capital.

ITC’s presence in PPFCF reflects the doctrine articulated by Rajeev Thakkar , Chief Investment Officer (Equity) of PPFAS Asset Management Private Limited , and the broader fund team including Raunak Onkar , the head of research who tracks consumer sectors. The investment combines a high free cash flow business, a substantial and growing dividend yield, and an underlying portfolio of FMCG, hotels and paperboards that the team has argued was being valued at a heavy discount to comparable peers. The thesis was anchored in PPFAS margin of safety and PPFAS value investing principles.

This article documents ITC’s role in PPFCF: the company background, the contrarian-build thesis, the position history through the 2025 second-largest weighting, recent positioning across 2026 factsheets, and the relative ranking against other top domestic holdings such as HDFC Bank at PPFCF , Power Grid Corporation at PPFCF and Coal India at PPFCF .

Company background

ITC Limited, incorporated on 24 August 1910 as the Imperial Tobacco Company of India Limited, is one of India’s oldest listed companies. The corporate name was changed to India Tobacco Company Limited in 1970, then to I.T.C. Limited in 1974 and finally to ITC Limited in September 2001. The company is headquartered at Virginia House in Kolkata and is registered with the Registrar of Companies, West Bengal. ITC’s equity shares are listed on the National Stock Exchange and the Bombay Stock Exchange and form part of the Nifty 50 and the Sensex .

ITC operates across cigarettes, branded packaged foods, personal care, education and stationery, agribusiness, paperboards and packaging, hotels and information technology (through its subsidiary ITC Infotech). Cigarettes historically dominated profit contribution, but FMCG-Others has been the fastest-growing segment for over a decade. ITC is the parent of the Aashirvaad, Sunfeast, Bingo!, Yippee!, Classmate, Mangaldeep, Fiama and Vivel brands among others.

The official corporate website is itcportal.com and the investor relations section publishes the annual report, quarterly results and shareholding pattern. ITC has consistently been among India’s largest dividend payers, distributing the bulk of profits to shareholders. In 2024 ITC demerged its Hotels business into a separately listed entity, ITC Hotels Limited, in a structural transaction that PPFAS analysed in factsheet commentary.

For Indian retail investors, exposure to ITC is straightforward through direct equity purchase, derivatives on the NSE/BSE or through diversified equity mutual fund schemes. PPFCF’s exposure delivers indirect ownership through a SEBI Mutual Funds Regulations 1996 registered scheme taxed under the equity mutual fund taxation in India regime.

Investment thesis at PPFCF

The PPFAS thesis on ITC has been articulated in multiple monthly factsheets and in Annual Unitholders’ Meet discussions. The core argument rests on several pillars.

First, PPFAS margin of safety . During the 2018 to 2022 window, ITC’s price-to-earnings multiple compressed to levels that the team described as more attractive than for many mid-cap consumer franchises with weaker free cash flow profiles. The market was discounting ITC for ESG-related concerns around cigarettes, for regulatory uncertainty around GST and tobacco taxation, and for the perceived under-monetisation of non-cigarette segments. PPFAS argued that the discount was excessive relative to the underlying cash generation.

Second, dividend yield and capital return. ITC has maintained one of the highest dividend payout ratios among large Indian companies, with a yield that, during much of the build period, exceeded the yield on Indian ten-year government securities by a meaningful margin. For a tax-aware fund operating under PPFAS tax-aware portfolio management doctrine, the combination of yield and low turnover was attractive.

Third, business quality outside cigarettes. ITC’s FMCG-Others segment had been growing in double digits and was approaching profitability inflection. The Aashirvaad, Sunfeast and Bingo! franchises were already among the top brands in their respective categories. The paperboards and agribusiness segments were earning industry-leading returns. PPFAS argued that the consolidated business deserved a higher rating once the non-cigarette segments crossed scale and margin thresholds.

Fourth, contrarian positioning. The build occurred when the broader market had rotated out of consumer staples into growth and technology. ITC was widely under-owned by domestic mutual funds and by foreign portfolio investors. This was consistent with the PPFAS contrarian investing doctrine of buying durable franchises when sentiment is poor and valuations have compressed.

Fifth, PPFAS focused portfolio discipline. ITC met the quality bar that the team applies to each new addition: returns on capital above the cost of capital, durable competitive position, free cash flow conversion and balance sheet strength.

Position history

ITC has appeared in PPFCF factsheets across multiple periods, with weight rising materially over the 2022 to 2025 window. During the early years of the fund (2013 to 2017) ITC was a smaller domestic position, and the team’s emphasis was on building the international sleeve in Alphabet at PPFCF , Microsoft at PPFCF , Amazon at PPFCF and Meta Platforms at PPFCF .

The February 2022 SEBI MF overseas investment cap freeze marked a structural pivot. With fresh foreign-securities purchases blocked, incremental inflows had to be deployed domestically. ITC, then trading at depressed multiples, was a natural beneficiary of this redeployment. The factsheet weight of ITC rose materially through 2022, 2023 and into 2024 as the team accumulated the stock on price weakness.

By 2024 ITC was already among the top five PPFCF holdings. The 2025 disclosure period when ITC reached 7.99 per cent of net assets, alongside Amazon at 8.51 per cent and Alphabet at 7.08 per cent, represented the peak observable weight of the position. By April 2026 the top three configuration had shifted, with HDFC Bank at PPFCF at 7.94 per cent, Power Grid Corporation at PPFCF at 6.99 per cent and Coal India at PPFCF at 5.95 per cent leading the portfolio. ITC continued as a top-tier holding within the broader top-ten ranking.

ITC has also been a recurring discussion topic at the PPFAS Annual Unitholders Meet , where unit-holders have asked about the ESG implications of cigarette holdings, the structural outlook for tobacco taxation, the FMCG margin trajectory and the implications of the 2024 hotels demerger. Rajeev Thakkar and Neil Parag Parikh have addressed these questions directly in successive editions.

Recent positioning

The April 2026 factsheet, when PPFCF AUM rose to Rs 1,40,949 crore (up 9.29 per cent month-on-month from Rs 1,28,966 crore in March), showed the top three configuration of HDFC Bank, Power Grid Corporation and Coal India. ITC continued as one of the larger domestic holdings, although the precise rank within the top ten has varied month-on-month.

In monthly factsheet commentary, Rajeev Thakkar has consistently described ITC’s underlying segments as undervalued relative to peers and highlighted the company’s free cash flow conversion and dividend yield. He has resisted reducing the position aggressively even after the 2024 to 2025 re-rating, consistent with the PPFAS value investing discipline that retains compounders so long as the investment thesis remains intact.

The May 2026 commentary on the fund holding around 18 to 22 per cent in PPFAS cash holdings reflected valuation caution. ITC has been a relatively defensive holding within the equity sleeve, which has supported the team’s overall risk-management posture.

Comparison with peer holdings

Within PPFCF’s domestic sleeve, ITC sits alongside HDFC Bank, ICICI Bank, Bajaj Holdings at PPFCF , Power Grid Corporation and Coal India as anchor holdings. Compared with HDFC Bank, ITC offers a different economic complex (consumer staples and cigarettes versus banking) and a different cash-flow profile (high free cash flow conversion with a dominant dividend payout, versus reinvestment into loan-book growth).

Compared with Maruti Suzuki at PPFCF and Mahindra and Mahindra at PPFCF within the consumer-discretionary cluster, ITC provides exposure to lower-cyclical end-markets. Compared with Cipla at PPFCF and IPCA Laboratories at PPFCF within healthcare, ITC offers higher dividend yield and lower regulatory complexity around export markets.

Relative to the international anchors Alphabet, Microsoft, Amazon and Meta, ITC provides rupee revenue exposure and a more stable dividend stream, but with lower long-term reinvestment runway. The combination of high-quality global compounders and high-yield Indian staples is consistent with the broader PPFAS focused portfolio construction.

Context within PPFCF

PPFCF was launched on 24 May 2013 as Parag Parikh Long Term Value Fund (PPLTVF), renamed Parag Parikh Long Term Equity Fund on 16 February 2018 and renamed Parag Parikh Flexi Cap Fund on 13 January 2021. The scheme is benchmarked against the Nifty 500 TRI and has delivered a compound annual growth rate since inception of approximately 19.06 per cent against a category average of 15.22 per cent and the Nifty 500 TRI at 12.4 per cent. AUM crossed Rs 1 lakh crore in May 2025, making PPFCF the first active equity mutual fund scheme in India to do so, and rose to roughly Rs 1.6 lakh crore by 15 May 2026.

The fund is managed by Rajeev Thakkar along with Raunak Onkar , Raj Mehta , Rukun Tarachandani and other team members. Parag Parikh , the founder of the Parag Parikh Financial Advisory Services Limited sponsor entity, established the investing house in 1979 and incorporated PPFAS Ltd in December 1992. The mutual fund was set up with SEBI on 10 October 2012 under registration ID MF/069/12/01.

ITC’s role in PPFCF has been a recurring topic at the PPFAS Annual Unitholders Meet , the Indian mutual fund industry’s nearest analogue to the Berkshire Hathaway Annual General Meeting. The 12th edition was held on 22 November 2025 at Birla Matushree Sabhaghar in Mumbai. The format includes unit-holder questions on individual holdings, and ITC has consistently been among the most discussed.

External references

ITC Limited corporate site: itcportal.com
ITC investor relations: itcportal.com/investor
PPFAS AMC factsheet archive: amc.ppfas.com/downloads/factsheet
PPFAS scheme page (PPFCF): amc.ppfas.com/schemes/parag-parikh-flexi-cap-fund
SEBI: www.sebi.gov.in
AMFI member page: amfiindia.com/member/64

References

PPFAS Mutual Fund, October 2025 factsheet, amc.ppfas.com .
PPFAS Mutual Fund, March 2026 factsheet, amc.ppfas.com .
INDmoney, “PPFAS Flexi Cap April 2026 portfolio update,” indmoney.com .
Whalesbook, PPFAS Flexi Cap stock holdings disclosure, whalesbook.com .
Angel One, “Parag Parikh Flexi Cap Fund crosses one lakh crore AUM,” angelone.in .
Business Today, May 2026 cash commentary, businesstoday.in .
ITC Limited, Annual Report 2024-25, itcportal.com .

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Last reviewed: 16 May 2026
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