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CMP:172 SL:160 TGT:196 HORIZON: 1-30 Days
Investment Rationale
ITC has a diversified revenue mix. From cigarette segment being the
core business to FMCG segment, hotels, agri and paper products.
Cigarette contributing almost 50% to the revenues followed by 20%
from FMCG, 14% from agri, 11% paper and paper products and 5%
from Hotel segment.
Cigarette segment is going strong with improving margins and going
forward it is expected to show good volume growth (over ~6% in
FY12).
Other segments are also on track, with personal care division aiming
for a 10% market share going forward. FMCG business continues to
surprise with reduction in losses and new successful launches.
The agri business continued its robust performance with paper and
hotel segment improving and expected to show sustained growth in
the coming year.
ITC is expected to be the biggest beneficiary as excise duty was kept
untouched in budget as Cigarettes have been an extremely overtaxed
segment, both at the Centre and states, leading to an erosion of the
tax base and an increase in smuggling and proliferation of illegal
products
We remain positive on strong fundamentals, diversified business
model and better outlook on sustained performance going forward.
Budget 2011-12 Implications
Excise duty on Cigarettes left untouched (against expectation of over 7%
increase), Paves way for strong volume growth in cigarette sales in FY12,
as no need to drastically increase cigarette prices.
Change in surcharge on income tax, from 7.5% to 5%. The tax rate would
come down by 75bps for those companies paying full income tax rate.
Companies such as ITC would benefit by the lower income-tax rate.
Technical Comments
The stock has given breakout after a consolidation of last three weeks
with huge volumes. The counter has given reversal with engulfing the
last five weeks candles. One can initiate long
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
CMP:172 SL:160 TGT:196 HORIZON: 1-30 Days
Investment Rationale
ITC has a diversified revenue mix. From cigarette segment being the
core business to FMCG segment, hotels, agri and paper products.
Cigarette contributing almost 50% to the revenues followed by 20%
from FMCG, 14% from agri, 11% paper and paper products and 5%
from Hotel segment.
Cigarette segment is going strong with improving margins and going
forward it is expected to show good volume growth (over ~6% in
FY12).
Other segments are also on track, with personal care division aiming
for a 10% market share going forward. FMCG business continues to
surprise with reduction in losses and new successful launches.
The agri business continued its robust performance with paper and
hotel segment improving and expected to show sustained growth in
the coming year.
ITC is expected to be the biggest beneficiary as excise duty was kept
untouched in budget as Cigarettes have been an extremely overtaxed
segment, both at the Centre and states, leading to an erosion of the
tax base and an increase in smuggling and proliferation of illegal
products
We remain positive on strong fundamentals, diversified business
model and better outlook on sustained performance going forward.
Budget 2011-12 Implications
Excise duty on Cigarettes left untouched (against expectation of over 7%
increase), Paves way for strong volume growth in cigarette sales in FY12,
as no need to drastically increase cigarette prices.
Change in surcharge on income tax, from 7.5% to 5%. The tax rate would
come down by 75bps for those companies paying full income tax rate.
Companies such as ITC would benefit by the lower income-tax rate.
Technical Comments
The stock has given breakout after a consolidation of last three weeks
with huge volumes. The counter has given reversal with engulfing the
last five weeks candles. One can initiate long
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