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Add ITC, target of Rs 218: IIFL
IIFL has initiated an add rating on ITC with a target price of Rs 218. With 1QFY09 results showing a continued shift in ITC’s cigarette volumes from plains to filters, the research firm expects investor concerns on cigarette volumes to start abating.
IIFL has initiated an add rating on ITC with a target price of Rs 218 in its September 2, 2008 research report. "With 1QFY09 results showing a continued shift in ITC's cigarette volumes from plains to filters, we expect investor concerns on cigarette volumes to start abating. Judging by FY08 numbers, the shift should accelerate in the quarters ahead. Separately, we expect no significant increase in losses from the non-cigarette FMCG business. ITC's current valuation of 18.4x FY10ii EPS-at a 15% discount to its three-year trading average- factors in a decline in cigarette volumes and a sharp increase in losses from the personal-care business. We believe the risk reward has turned favourable for ITC, with likely positive surprises in cigarette volumes and other FMCG businesses. We initiate with ADD and a 1-year SOTP-based target price of Rs 218," says IIFL's research report.
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