ITC trading at 35% discount to peers; accumulate stock:

In a chat with ET Now, Pankaj Pandey, HoR, ICICIdirect.com, shares his view on whether cigarette maker ITC can be a good contra bet amid talks of a hike in taxes on tobacco products in the GST Bill.

ET Now: For the longest time, we have argued that ITC could be a great contra buy. But now that the GST Bill is coming and the much-talked sin tax is expected to ensure that tobacco prices will go only higher, does it make sense now to get rid of ITC or should one be a smart buy into the stock?

Pankaj Pandey: ITC is paying about 51 per cent taxes including the value-added tax and central excise. There are expectations of an increase in excise rates. But what we are expecting is that once the bill is implemented, you will see stabilisation of rates over the next two or three years. That will help ITC to recoup volumes, which has been falling for the past 2-3 years. Other businesses of the company, meanwhile, are expected to do well. This include consumer-oriented segment, which should benefit from a decline in commodity prices. That is why we like the scrip .The stock is trading at about 35 per cent to the FMCG universe, peers. It makes a good sense to accumulate the stock at current levels.