The Hindu Business Line : ITC up 3% on improved financial performance

ITC on Friday shot up over 3 per cent on improved results and buying, but could not resist the slump in the benchmark indices (4.53 per cent weight on the Sensex) as others crumbled. While 2.56 crore shares changed hands on the NSE (including a single deal of 5.3 lakh), on the BSE, the volume was 62 lakh shares, a record of sorts.

The Company Chairman, Mr Y.C. Deveshwar, at the AGM today puffed off shareholders’ concern over the slow appreciation of the stock’s market valuation and relatively lower P/E ratios by explaining that the company’s growth trajectory in new non-cigarette businesses would gradually be factored in by the market, as he saw an “assured future” for these new businesses.

According to analysts, despite increases in cigarette price, the sale volumes did go up and the other businesses have shown clear signs of improvement. “A smothered effect of cyclical elements in the product baskets would give a real clue to the yearly growth in the second quarter”, an analyst with an institutional investor said.

Bullish on next quarters

Stopping short of giving a formal guidance, the ITC Chairman indicated that the current and the next two quarters could be even better.

Analysts also found acceptable his suggestion that the introduction of VAT regime might provide positive effect on the balance sheet in the coming quarters.

According to Mr Gul Teckchandani, an investment strategist, FMCG stocks are in vogue among the investors because of the evident growth opportunities. “Increase in earnings is visible in all the sector players as more disposable income-led consumer boom gradually unfolds the road ahead”.

An overseas fund manager felt that the new businesses would take a few more years to attain recognisable scale. “But the investments in brand building and sales growth are already paying off. In the long-term, ITC may reflect whole range of growth products, which would dwarf cigarette business.”

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