Future and Options: ITC

ITC has closed the day with a price of 207 on the NSE. With a value of 207, its valuation is around 17. It is historic Low valuation as below. The reason being the rice in NCCD in the recent budget.

I believe that ITC should trade minimum above 20 P/E.

ITC has already raised the prices of its products to counter effect the price hike:

Excerpts from Economic Times:

"ITC has hiked cigarette prices by 10% to 20% to offset the increase in taxation on cigarettes announced in the budget. The maximum price hike has happened in the small and regular size sticks which account for bulk of the sales.

ITC, which accounts for every three of four cigarettes sold in the country, has increased prices by 10% in the premium segment, while for the regular cigarette of 69-mm size the price has gone up by around 14-16%. In entry level sub-64 mm small size cigarettes, the hike is between 12% and 20% depending on the brands."

One of my colleague who is a regular smoker. When I asked him about the price hike, a cigarette which was costing 15 Rupees, Now costs 16 Rupees. It is just 1 rupees at the mid range. He said that this price hike has no effect. I believe that this is the mind set of Overall customer of ITC. Hence Volume may not get affected to the tune the stock is beaten down. 

I am not giving any target for ITC, but I strongly believe that ITC is @ Lower end. People who wants to go long in futures or Call buyers of ITC or ITC stock buyers for mid to long time can seriously look into this  stock right now. Or Anyone has views about this stock, share it in the comment section.

Thank You.

Chetan Biluve

Disclaimer: 

My above views are personnel. These views are neither buy nor sell calls. I am only expressing my views. I have invested a few quantity of shares in ITC, And also I do future trading in ITC. I also, proudly say that I have never lost a Rupee in Futures Trading.