Looking first at the TECHNICALS, we see that on the 2 yr Price Charts, the 200 DMA has been decisively violated only once ie on 31/1/2011 wherein the Scrip traded below the same for a period of about a month. Other than this, the 200 DMA has never been violated during the last 2 years. On 26/2/2010 the Stock just about closed AT the 200 DMA. The 200 DMA is at 183. It is also true that the Stock traditionally sees a little weakness in the immediate proximity of the Annual Budget due to the Excise Hike on Cigarettes factor. However, price recovery has always been swift thereafter.
Perusing the FUNDAMENTALS we see that the performance has been outstanding with Net Profit growing between 21 to 25% in the last 5 consecutive quarters!!! The Cigarettes business, in particular, has indeed defied all naysayers by consistently outperforming Quarter after Quarter. Overall the Company seems poised to deliver 20-25% CAGR over the next couple of years at the very least. Thus Currently the Scrip trades at about 22x FY2011-12 E which is pretty reasonable for a thoroughbred. Having said this, the Stock is definitely not an outright zoomer but a bit of a steady plodder, if one might call it that. So if one wants safety plus steady returns then ITC is a definite choice. Growth visibility is excellent with the Brands enjoying great pricing power; the only upstart ie the FMCG foray is also slated to turn profitable in the near future. So pretty hunky-dory.
As far as Best Entry price is concerned, there is solid support at 184 levels ,unlikely to be broken in a hurry and above that 191 levels. So the long term investor could enter in the 185-195 range for reasonably safe 20-25% returns oner the next 12 months.
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