In an interview to CNBC-TV18, Naveen Kulkarni of Phillipcapital shares his views on ITC after the stock took beating led by excise duty hike on cigarettes in the Union Budget Saturday.Below is verbatim transcript of the interview:
Q: What is your call on ITC now after the kind of selling we have seen in two days and the kind of excise hike?
A: We have a sell call on ITC with a price target of Rs 340. The call is again based on the rising regulatory pressures in terms of taxation and other non-taxation related initiatives which the government might take which will result in further pressure on volumes for the company.
Q: When you say further volumes what do you estimate?
A: For FY15 the volume decline might be in the range of 7-8 percent for the company for cigarettes business.
Q: What about Q4?
A: In Q4 it might be in the range of 10 percent plus. So Q3 was in the range of 12-14 percent so Q4 might be in a similar range. Some bits of volumes have come back but I do not think there is much.
Q: What about FY16?
A: In FY16 we are expecting in the range of 8 percent.
Q: At what point does the stock become a buy anytime in the near future?
A: It is difficult to say; what you are saying is right so somewhere in the range of Rs 300 people will start seeing a lot more value in the company because earnings wise I do not see them de-growing even next year. Therefore, there will be some earnings growth over the next two years but over all the business is under tremendous pressure especially the cigarettes business.
Disclosure: I do not hold ITC.
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