ITC’s cigarette business that has dominance in the category continues to be a cash cow for the company. It has chalked out aggressive roadmap for making a mark in the Indian FMCG market.
With successful brands such as Bingo, Sunfeast and Aashirwaad already in the reckoning among the best in the industry, its FMCG business is on a strong footing.
The company has further ventured into the personal care category with the launch of Superia and Fiama Di Wills soaps and shampoos that would compete with the likes of the products of HUL and P&G.
Aggressive expansion plans in hotels and paper segments would ensure inclusive growth across segments for the company.
We believe ITC has a well-diversified business model with multiple revenue drivers that would ensure sustained growth for the company.
It remains our top pick in the sector. At the current market price, the stock trades at 14.8x its FY10E earnings. We maintain BUY recommendation.