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    ITC: Do good dividend yield and reasonable valuations make it a winner?

    Higher incidence of tax on cigarettes by the government can affect ITC’s profitability

    Nandish Shah
    June 29, 2020 / 01:06 PM IST
    ITC: Do good dividend yield and reasonable valuations make it a winner?

    PRO Only Highlights
    -      Quarterly performance largely backed by improved realisations
    -      Medium-term triggers China plus and protectionist measures for tyre industry
    -      Valuations not inexpensive; but improved medium-term outlook

    A huge rally in the markets from its March bottom has meant that most stocks are fully valued or trading at stretched valuations. One frontline stock that is offering value in an overheated market is ITC. The company is trading at reasonable valuations (perhaps the cheapest in the FMCG space) and offers good dividend yield as well. While we acknowledge taxation risks to its cigarette business, we believe its capital allocation strategy across various businesses will yield results in the...

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