Make a contra call on ITC: Hemendra Hazari

In a chat with ET Now, Hemindra Hazari, Market Expert, shares his views on markets. Excerpts:

ET Now: Is it game over for ITC at least for the next three-four quarters? They will have to balance out the pricing and, thereby, how the demand and volume pan out?

Hemindra Hazari: I would take a slightly contrary approach. At present, a lot of brokerages have been downgrading ITC at a time when the market monemtum is positive. In the ongoing surge in the markets, it is very difficult to find a quality stocks at the prices at which ITC is trading at. Therefore, even as the commentary on ITC is negative, this is one stock where one should look at entering.

ET Now: Why should one buy a business which is contracting?

Hemindra Hazari: It depends on the way you see it. We can expect some turnaround going ahead. This could be a good time because the Street is quite negative on the stock. A lot of negatives may have already been factored into the price.

ET Now: But turnaround of what kind? Excise duty will never come off for the cigarettes segment. The government will continue to keep upping cigarette prices?

Hemindra Hazari: As long as people continue to smoke, it will continue to be the case. That is why I believe that the a deceleration in volume growth is a worry. A lot of the FMCG stocks today are ruling at highly-inflated valuations. But, ITC is one of those where the Street has been disappointed for some time.

Therefore, from a slightly longer-time period, this would be a stock where exposure can be made given the negativity surrounding the stock at present.