ITC remains fundamentally strong
ITC Limited is one of India’s foremost private sector companies with a market cpaitalisation of over $13 billion and with diversified presence in various sectors. The over-arching vision of the company is expressively cpatured in its corporate positioning statement, Enduring value for the nation and for the shareholder.
RS.350 crore is likely to be invested by the company in the next three-four years through its foods division for a foray into the snacks segment. This includes setting up of about three new manufacturing plants across the country.
ITC Foods Division Divisional Chief Executive Ravi Naware said that in the next three to four years they would be looking at having two more plants to have complete presence in all the regions of the country.
The Value Added Tax (VAT) fear forced the shares of ITC to slump, through it has gained back its monentum again. The fall in the prices of the scrip was due to the West Bengal Government’s comment that it will impose VAT on tobacco and tobacco products starting April 1.
A recent report by DSP Merill Lynch says that steep tax increases will sharply slowdow ITC’s EPS growth in FY08 to six percent as compared to last 2 years of average of 20 percent. This is just a matter of this year.
Despite the negativities in the market, the scrip prices slowing down of and on, Merill Lynch feels that ITC’s business is fundamentally strong. Let’s see how far this under performance is ruled out by its strong fundamentals.
