ITC LIMITED SPECIAL REPORT From CAPITALHEIGHT

ITC LIMITED 

Indian Tobacco Company (ITC) Ltd. is the multi business enterprise and is the third largest packaged food company in India. The Company is active in the domain of FMCG, Hotels,Paper boards, Packaging, Agri Business and Information Technology. The Company has completed 100 years in 2010, established in 1910 with the name ok Imperial Tobacco Company of India Ltd. At the earlier stages the company’s main focus was on Tobacco Products. In the 1970’s it started business in non-tobacco products. Recently the company has announced that ITC will target Rs 1 lakh crore income from FMCG business by 2030. Currently the revenue from FMCG business for FY 2017 crosses Rs. 8000 Crore. 
  • Major Cigarette brands includes wills Navy Cut, Gold Flake, Insignia, Classic, Bristol
  • Major Food brands Include AashirvaadAata, Sunfeast, Bingo, yippee 
  • Other brands Fiama Di Wills, Classmate, Wills life Style, MangaldeepAgarbattis 
  • Hotels includes Welcom Hotel, India’s 2nd largest Hotel Chain 
  • ITC features on the Forbes Global 2000 rankings for 2012 at position 841. 
Fundamental Analysis 
ITC has a market capitalization of $US 50 billion and turnover of $ 8 billion. ITC plans to invest 25,000 cr funds to strengthen non tobacco business. ITC grows faster than its peers Britannia and Nestle in the past 13 years with a CAGR of 17.97%. If it will grow with the same CAGR till 2030 than it will achieve the set target of 100000 cr. 
  • The company’s revenue from cigarettes is around 34,000 cr. and total revenue is around Rs. 55,000 cr. 
  • It covers nearly 80 percent of the Indian Tobacco market. 
  • ITC has reported net profit of Rs. 2560 cr in the last quarter i.e. June 2017 
  • ITC is the cheapest stock to buy among its peers in terms of price to book value 
  • ITC plans to open 40 new hotels, with 5000 rooms to magnify its hospitality business. 
  • The consolidated revenue from hotel business increased to 1414 cr from 1257 cr in FY 2016-17 
  • It’s price to earnings ratio is near to Industry P/E, signals it is not over valued 
  • ITC’s hotel chain in the country, reported 6.1 per cent growth in gross revenue at Rs 304.89 crore during the first quarter 2017 
  • ITC is the most liquid stock among its peers Britannia (4280), Godrey Phillips (966), and VST (2826), ITC is only Rs.262 per share split at Face value of Re. 1 
Fundamentals
Market cap
318872 cr.
Face value
Rs. 1
Book value
Rs. 38.19
EPS
Rs. 8.54
52 Week H/L
Rs. 367.7/ 222
Dividend Payout
475.00%
Listed at
NSE/BSE




Technical Analysis 
The stock has corrected nearly 30% from its all-time high of 367 and currently trading near 260.It is also the level which ITC breaks in February 2017. 265 was the key reversal level in December 2014, then in February 2015 and then in September 2016. The stock fell down every time when in the last 3 years when it comes near 265, but in February this year it breaks out this level and gains nearly 30 % in last months. Now 265 became the key support level and a reversal is expected. 
  • It has strong trend line support drawn from the lows of February 2016 
  • 100 day EMA also supports the stock which works good on ITC weekly chart 
  • RSI forming a hidden divergence on weekly chart also signals a recovery in the stock 
  • The stock has corrected nearly one third of its value, Now a good level to start buying 
  • 265 earlier became three times monthly resistance now may support the stock. 
Technically the stock may take a bounce from its supports and it can target 295-300 level in the next month, Technical stop loss should be below 240.

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