NSE Code: ITC
ITC not only into cigarette business but has diversified portfolio which consist of FMCG, Hotels, Agri Business, Paperboards & Speciality Papers, Information Technology and Packaging
ITC is currently trading on multiyear low valuation and provides an attractive level to enter, with P/E of 33.4 and EPS of 8.40, I think this is right time to accumulate with full capacity of yours as all kinds of negative new are floating in market for this stock.
Technical View:
If you see ITC is trading at 33.40 multiples of PE which is quite high and if we compare it with last several years of PE with Mar2017 is highest so if we look at their cash flow and debt level will get the answer why ITC demands such a high valuation.
It’s Debt to equity ratio is 0.0004:1 which is almost Nil.
On charts with its previous high of 367.5 currently it is consolidating at 256-260 and looks to me taking support near 256 which is coming at 23.6% retracement going below this will open a risk of almost 30pts and may go to previous low of 223.4 which looks a bit difficult to me. On 18 July, 2017 this index heavy weight opened gap down by 12.63 percent reason being the GST council has hiked the compensation cess on the filter and non-filter cigarettes, as this is going to impact the earnings of the cigarette companies as they will either absorb the tax impact or see some drop in volumes if
they hike the prices, but still I see this is sticky business a smoker never complains or quite smoking on price hike, after this gap down opening it never tried to fill that gap and currently into bear grip. The strength of the bears is recognized by the unfilled gap. ITC stock facing significant selling pressure.[/vc_column_text][/vc_column][/vc_row]