ITC LIMITED

COMPANY PROFILE

Indian Tobacco Company Limited was incorporated on 24 August 1910 under the name of Imperial Tobacco Company of India Limited and its name was changed to ITC Limited in 1974.The Company is rated among world's most reputable companies by Forbes magazine and among India’s most valu- able companies by Business Today.

The Company employs over 31,000 people at more than 60 locations across India and has a diversified presence in FMCG (Cigarettes, food, retail, personal care, education and stationary), Hotels, Paperboards & Specialty Papers, Packag- ing, Agri-Business, and Information Technology.

A majority of ITC Limited revenue comes from cigarette sales where the Company is the market leader with 80% total cigarette market share. ITC Limited popular cigarette brands in- clude Insignia, India Kings, Lucky Strike, Classic, Gold Flake, Navy Cut, Players, Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut and Duke & Royal.

Over the last few years however, the Company has been ex- panding rapidly in the FMCG (non-cigarette), retailing and hotel space. Some of the brands in this space includes: Aashirvaad, Sunfeast, Bingo!, Yippee!, Candyman, mint-o, Fiama Di Wills, Vivel, Engage, Classmate, Wills Lifestyle, John Players Mangaldeep and Aim.

STOCK INFORMATION

STOCK PRICE

373.75

TARGET PRICE

380-395

SECTOR

FMCG

SYMBOL (AT NSE)

ITC

ISIN

INE154A01025

FACE VALUE (IN RS.)

1.00

BSE CODE

500875

STOCK FUNDAMENTALS

MARKET CAP

298754.20

BOOK VALUE

32.89

EPS - (TTM) (IN RS. CR.)

11.91

P/E

31.36

INDUSTRY P/ESHAREHOLDING PATTERN

35.56

SHAREHOLDING PATTERN

INVESTMENT RATIONALE

ITC Limited plans to stimulate the distribution strategy for its FMCG business by increasing its direct reach to ~1 lakh villages in India. These 1 lakh villages account for ~80% of rural con- sumption. This initiative depicts ITC’s aggressive approach towards growing its FMCG business, which currently ac- counts for ~25% of its net sales (FY14) in comparison to ~16% in FY08. ITC’s growth from the segment has been phe- nomenal at ~22% CAGR in FY08-14.

OUTLOOK AND VALUATION

With the FMCG sector witnessing a continuous slowdown in volumes (ITC’s volume growth has dipped from 16-18% until Q4FY12 to 5-7% in Q2FY15), this initiative would be a shot in the arm for ITC. Further, we believe that with continuous regulatory pressure and belligerent price hikes in cigarettes, ITC would be far more aggressive in growing its FMCG busi- ness. We have modeled revenue CAGR of 16.5% from FY14- 17E clocking revenues of 12850 crore by FY17E.

RESULTS (Quarterly )(Rs CR.)

 

DEC' 14

SEP' 14

JUN' 14

MAR 14

DEC' 13

Sales

8,942.59

9,023.74

9,248.29

9,238.52

8,726.85

Operat- ing profit

3,464.20

3,488.65

3,277.59

3,203.39

3,284.30

Interest

8.37

18.39

15.15

9.53

9.14

Gross profit

4,037.82

3,826.48

3,496.99

3,460.57

3,666.22

EPS (Rs)

3.30

3.04

2.75

2.86

3.01

TECHNICAL VIEW

ITC Limited is looking strong on charts. We advise to buy around 370-375 with stop loss of 360 for the targets of 380-395 levels. RSI is also showing upside momentum in it on daily charts.

SYMBOL

VALUE

ACTION

RSI(14)

63.426

BUY

STOCH(9,6)

66.681

BUY

STOCHRSI(14)

100.00

OVERBOUGHT

MACD(12,26)

2.840

BUY

ADX(14)

21.836

BUY

WILLIAMS %R

-3.860

OVERBOUGHT

CCI(14)

186.9371

BUY

ATR(14)

3.8571

LESS VOLATILITY

HIGH/LOWS(14)

4.8179

BUY

ULTIMATE OSCILLATOR

59.235

BUY

ROC

1.938

BUY

BULL/BEAR POWER()13

11.8500

BUY

BUY: 9 SELL:0 NEUTRAL: 2

SUMMARY : STRONG BUY

Our Other Recommendation for Next Week

SCRIP

ACTION

CMP

ENTRY

SL

TGT

TIME FRAME

BANK OF INDIA

SELL

248.45

250-255

265

240-225

ONE WEEK

UNION BANK

SELL

191.6

190-195

200

185-180

ONE WEEK

PFC

BUY

281.15

278-282

274

286-290

ONE WEEK

GLENMARK

BUY

742.6

740-750

720

770-790

ONE WEEK

MOTHERSON SUMI

SELL

430.8

430-440

450

420-405

ONE WEEK

Performance of Previous Week

SCRIP

LOT

ACTION

ENTRY

SL

TGT

P&L

REMARK

CLOSE/LOW/HIGH

RELINFRA

500

BUY

500-510

480

525-540

7500.00

FIRST TGT HIT

460.75 / 526.00

HINDUSTAN CONS.

8000

BUY

32-35

28

37- 40

16000.00

FIRST TGT HIT

32.30 / 37.80

ADANI ENT

500

BUY

615-625

605

635-650

10000.00

FIRST TGT HIT

631.70 / 667.70

HDIL

4000

BUY

107-110

105

114-118

16000.00

FIRST TGT HIT

115.15 / 116.00

JP ASSOCIATES

8000

BUY

28-30

26

32-35

-16000.00

SL TRG

25.90 / 29.60

ALLAHABAD BANK

2000

SELL

118-120

125

112-105

23800.00

FIRST TGT HIT

110.10 / 106.10

NET PROFIT

 

 

 

 

 

57300.00

 

 

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DISCLAIMER

This report is only for the information of our customers. Recommendations, opinions, or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.

 

 

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