Ito En, Ltd. (TSE: 2593): Stock Analysis
August 7, 2025
1. Introduction
Ito En, Ltd. is Japan’s largest green tea company, known for its iconic “Oi Ocha” brand and strong commitment to health, sustainability, and innovation. Despite steady financial performance and an ambitious growth strategy, the company’s stock has experienced a multi-year decline. This report explores the reasons behind the falling share price and evaluates whether a recovery is possible.
2. Stock Price Overview
Ito En’s share price has experienced a consistent multi-year decline despite its stable earnings. The share price fell from approximately ¥6,050 at the end of April 2021 to ¥3,420 by April 2025 — representing a total decline of approximately 40% over four years.
End-of-April Share Prices
| Year | Share Price (JPY) | YoY Change |
|---|---|---|
| 2021 | 6,050 | – |
| 2022 | 5,340 | -12% |
| 2023 | 4,210 | -21% |
| 2024 | 3,830 | -9% |
| 2025 | 3,420 | -11% |
Observations
Persistent downtrend: The stock declined for four consecutive years, with no rebound.
Steepest drop: The sharpest single-year decline occurred in 2022–2023 (-21%), likely reflecting a correction in investor expectations.
Muted reaction to strong results: Even after record-high operating profit in FY2024, the stock continued to decline in FY2025, pointing to structural market skepticism.
Interpretation
The downward trend suggests a market revaluation driven by:
A shift away from high-multiple defensive stocks
Limited short-term growth visibility despite strategic investments
Concerns over whether international expansion can deliver near-term financial impact
3. Financial and Operational Performance
Ito En has maintained solid fundamentals, showing consistent revenue growth and profitability:
Key Metrics (JPY in millions)
| Fiscal Year | Revenue | Operating Profit | Net Profit | EPS (JPY) | DPS (JPY) |
|---|---|---|---|---|---|
| 2021 (Apr) | 446,281 | 16,675 | 7,011 | 55.1 | 40 |
| 2022 (Apr) | 400,769 | 18,794 | 12,928 | 103.9 | 40 |
| 2023 (Apr) | 431,674 | 19,588 | 12,888 | 103.8 | 40 |
| 2024 (Apr) | 453,899 | 25,023 | 15,650 | 126.4 | 42 |
| 2025 (Apr) | 472,716 | 22,969 | 14,156 | 117.5 | 44 |
The company remains profitable and raised dividends for three consecutive years.
4. Why Is the Stock Price Falling?
Despite stable operations, the stock has declined. Several factors may explain this discrepancy:
① Valuation Compression
In FY2021, the stock traded at over 100x earnings. Today, even with an EPS of ¥117.5, the price of ¥3,417 implies a P/E of ~29x.
The market may be adjusting from a previously overvalued level to a more normalized multiple.
② Low Growth Perception
Although revenue has increased, net profit has not grown meaningfully since FY2022.
EPS has fluctuated but not shown a clear upward trend over multiple years.
③ Limited Domestic Growth
Japan’s beverage market is mature and saturated, limiting domestic upside.
Ito En’s strength in tea may not translate as easily to other high-growth categories (e.g., energy drinks, alcohol).
④ Muted International Traction
While the company is investing in overseas expansion (e.g., matcha products in North America), the scale remains relatively small.
The global strategy appears long-term, but markets may be seeking short-term catalysts.
⑤ Investor Style Shift
Global market trends have rotated toward higher-growth or deep-value stocks.
Mid-range, low-volatility stocks like Ito En may be overlooked in such environments.
5. Strategic and Technological Positioning
Despite these headwinds, Ito En continues to innovate and expand strategically:
Global Matcha Business: Developing a B2B “matcha solution” business for food manufacturers.
Sustainability Leadership: Over 56% of used tea leaves are recycled; aggressive PET bottle reduction.
Medium-Term Plan (2025–2029): Aims to become a “Global Tea Company” with strong focus on digitalization, human capital, and ESG.
These initiatives are future-oriented, which may not yet be fully reflected in short-term earnings or stock price.
6. Is a Stock Price Recovery Likely?
Current Valuation
Share Price (Apr 2025): ¥3,417
EPS (FY2025): ¥117.5
Trailing P/E: ~29x
Dividend Yield: ~1.29%
This suggests the stock has de-rated significantly from its peak, though it still trades above Japan’s market average P/E.
Upside Potential Exists If:
International Business Scales Up
Revenue from the U.S., Europe, and Asia could expand if consumer adoption of matcha and tea accelerates.New Business Models Succeed
Health-focused e-commerce, ingredient sales, and digital marketing could unlock new revenue streams.Sustainability Attracts Capital
Institutional investors prioritizing ESG may re-rate the stock as carbon-neutral targets are pursued.Reacceleration in EPS Growth
A return to EPS growth over multiple years would support share price upside.
7. Risks
| Type | Description |
|---|---|
| Execution | Overseas growth initiatives may take time or face cultural barriers. |
| Costs | Raw materials, energy, and logistics costs could pressure margins. |
| FX Risk | A strong yen could hurt foreign revenue contributions. |
| Investor Sentiment | ESG appeal may not be sufficient to drive valuation in the near term. |
8. Conclusion
Ito En’s stock has declined steadily for four years, even as its operations remained strong. This appears to be a case of valuation normalization and cautious investor sentiment rather than fundamental deterioration.
However, the company’s global aspirations, strong ESG position, and innovative product strategy provide potential long-term upside. If earnings momentum returns or international growth accelerates, the stock could re-rate from current levels.
Verdict: Fundamentally healthy, but waiting for a catalyst.
Watch for: FY2026 earnings momentum, overseas segment disclosures, and EPS trend recovery.
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This report is intended for informational purposes only and does not constitute investment advice. The analysis contains forward-looking statements and interpretations based on publicly available information as of the date of writing. Readers should conduct their own research and consult with a licensed financial advisor before making any investment decisions.
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