Why ITC's Sunrise Foods deal is positive but unlikely to push up valuation

While the deal offers distribution and sourcing synergies, pressure on dominant cigarette business remains

ITC’s acquisition of Kolkata-based Sunrise Foods — a market leader in eastern India in the spices category — is in line with the cigarette major’s focus on expanding its non-cigarette FMCG business. While the deal value was not revealed, some analysts peg it at around Rs 1,500-2,500 crore. 

Analysts say, the move improves the growth outlook of ITC’s FMCG business, which includes popular brands, such as Aashirvaad, Bingo!, Yippee!, and Sunfeast. While the deal is in the right direction, the dominance of the cigarette business continues, and hence, remains a key concern given the pressure on volumes. Moreover, the deal