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Should You Invest in ITC?
I.T.C. Limited is a company built on firm foundations. It is fundamentally sound and has made profits regularly over the years, as reported in their previous financial statements. The debt of the company is negligible and has delivered excellent returns on equity over the years. Moreover, ITC is one of the prominent FMCG marketers in India, making it a preferred choice in this category.
ITC is a leading player in the tobacco industry of India. The market share of the ITC is more than 70%, making it a leader in cigarettes market. The recent hike in cess and the subsequent hike in price has put the tobacco industry under pressure. However, due to a never-ending demand for cigarettes in the country, ITC is more than likely to recover from this cess hike and continue to deliver consistent growth in the tobacco segment.
ITC is also focussed on expanding its FMCG portfolio, and with this segment, the company has the vision of Rs.10,000 crore investment in the next 5 to 7 years. Furthermore, ITC Hotels are also continually improving, as seen in the numbers for the last quarter which means that revenue from non-tobacco segments is also increasing, although cigarettes still account for a significant portion of the profit made by the company. Nonetheless, as these segments grow, we may see this proportion of profits alter over the years, in favor of hotel business and FMCG products.
Investing in ITC stocks is a great option, especially if the idea is to stay funded for a long time. Provided that the stock is trading around Rs.270 as of February 2018, the entry price appears to be favorable.
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