ITC is one of the stock which is in an evergreen business and one can hold this stock till the time it sustains above 200 level. It has phenomenal growth potential. We even referred this stock in our Top 10 Stocks to Buy list. Go through below info to be all the more clear on stock potential.
- With a leading position in its various businesses, we expect ITC to sustain its gross revenue growth at 12.6% (CAGR from FY11- 14E), driven by healthy growth in FMCG (18.6%), agri business (16.3%) and paperboards (13.7%) with a moderate growth in cigarette (10.1%) and hotel (8.8%) revenues
- ITC is the market leader in the Indian cigarettes industry and enjoys ~75% volume share (FY11). Its cigarette revenues (gross) have grown by ~1.5x, from | 12833.7 crore in FY07 to | 19827.6 crore in FY11, largely driven by price growth of 11.3% with volume growth remaining flat. Being a dominant player, passing on the impact of higher taxes through price increases has not been tough for ITC. Therefore, we expect revenues from cigarettes to continue growing at a CAGR of 10.1% (FY11-14E) driven by 5.3% price growth and a lower volume growth of 4.5%
- Comparing with global peers like British American tobacco (BAT), Philip Morris and Japan Tobacco, ITC should trade at a premium given the opportunity size of the Indian market and expected higher earning growth. Simultaneously, a substantial reduction in FMCG losses and visibility of break-even would result in the FMCG segment commanding a higher valuation than the historic average. We remain positive on the stock from a 9 to 12 months perspective
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