Axis Direct is bullish on ITC has recommended buy rating on the stock with a target price of Rs 330 in its research report dated October 09, 2017.
Axis Direct's research report on ITC
According to media reports, the Health ministry has issued a directive that shops authorized to sell tobacco products will not be permitted to sell any non-tobacco products that are essentially meant for non-tobacco users, especially children. The Ministry has asked state governments to develop a mechanism through the municipal authority to provide “permission/authorization” to retail outlets selling tobacco products. While the directive is in line with various COTPA rules, implementation of such laws remains challenging.
Post GST-related price hike in July, we expect mid-single digit volume decline in Q2FY18. The stock has corrected 22% since rate hike in July and valuation at FY19E P/E of 25x seems significantly cheap. Maintain BUY with TP of Rs 330 based on forward P/E of 30x.
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