Edelweiss Securities maintains 'accumulate' rating on ITC
Edelweiss Securities has maintained its ‘accumulate’ rating on the stock.
ITC
CMP: Rs 194.25
TARGET PRICE: Rs 210
Edelweiss Securities has maintained its ���accumulate��� rating on the stock. The brokerage believes that hereon the cigarettes volumes performance and magnitude of FMCG-losses will be the key determinants of stock behaviour.
���As cigarettes contribute around 80% to ITC���s operating profit, the key risk is a possibility of decline in cigarette volumes on the back of high prices hikes. The entry and scaling up of foreign players such as Philip Morris and Japan Tobacco could stunt the phenomenal volume growth witnessed in cigarettes currently,��� the note said.
According to the brokerage, ITC expects its branded packaged business (68% of FMCG-others) to grow at around 35% y-o-y (year-on-year) this year on a higher base.
���We have modelled for 28% growth in FY09E (estimated). We forecast FMCG losses of Rs 4.25 billion for FY09E,��� the note added. At the current market price, says Edelweiss, the stock is trading at 20.8x and 17.5x and EV/EBITDA of 13.6x and 11.3 times of FY09E and FY10E estimates.
CMP: Rs 194.25
TARGET PRICE: Rs 210
Edelweiss Securities has maintained its ���accumulate��� rating on the stock. The brokerage believes that hereon the cigarettes volumes performance and magnitude of FMCG-losses will be the key determinants of stock behaviour.
���As cigarettes contribute around 80% to ITC���s operating profit, the key risk is a possibility of decline in cigarette volumes on the back of high prices hikes. The entry and scaling up of foreign players such as Philip Morris and Japan Tobacco could stunt the phenomenal volume growth witnessed in cigarettes currently,��� the note said.
According to the brokerage, ITC expects its branded packaged business (68% of FMCG-others) to grow at around 35% y-o-y (year-on-year) this year on a higher base.
���We have modelled for 28% growth in FY09E (estimated). We forecast FMCG losses of Rs 4.25 billion for FY09E,��� the note added. At the current market price, says Edelweiss, the stock is trading at 20.8x and 17.5x and EV/EBITDA of 13.6x and 11.3 times of FY09E and FY10E estimates.
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