Good pricing power, strong brand positioning makes ITC bullish: Manishi Raychaudhuri, BNP Paribas Securities

In a chat with ET Now, Manishi Raychaudhuri, MD & HoR, BNP Paribas Securities, shares his views on the current outlook of the ITC stock. Excerpts:

ET Now: ITC's Q2 performance has been average. What makes you bullish on ITC?

Manishi Raychaudhuri: The progression of tobacco usage from the unorganised sector into the organised sector has been a longer-term driver for ITC. This is a by-product of the demographic transition that India is going through.

ITC has a commanding market share of 65-70 per cent in this segment and they have maintained it.

The cigarette segment is going to be their profit driver. If their other businesses, like the food business for example, start generating profits, then that would be an icing on the cake.

ITC has constantly faced upward cost pressures as a consequence of the administered cost hike, in terms of the tax changes that are effected in the budget. The company routinely passes the amount to the consumers and still maintains its margins and market shares. They have a significant degree of pricing power and that comes from their strong brand positioning in the market. These are the reasons why we are positive on ITC.