"We expect the company’s performance to improve with steady rise in revenues and improvement in margins due to GST," says Sumit Bilgaiyan, Founder of Equity99.
Moneycontrol News
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Sumit Bilgaiyan
Founder of Equity99
ITC has been a steady compounder for the last thirty years. We expect the company’s performance to improve with steady rise in revenues and improvement in margins due to GST. Higher taxation will put a stress on cigarette volumes but that being a business with inelastic demand, is expected to bounce back in the long term.
With per capita consumption 1/18th China’s, cigarette opportunity in India remains attractive over the long term. However, with cigarette still contributing 85 percent to ITC’s EBIT, reliance on regulated business continues to remain high.
Currently the stock trades at 26X FY19 PE. We recommend a BUY on the stock with target price of Rs 310.
Disclaimer: The author is the founder of Equity99. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.