Why ULIP mis-selling has become rampant ?

ITC as a company evokes great respect among corporates and investors. The conglomerate has withstood time and consumer preferences to emerge as one of the country’s most respected business houses. However, the performance of the scrip has triggered funny memes on social media. Sample this — on May 13, 2016, the stock was trading at Rs 212.90. Five years later, May 14, 2021,  the stock closed at Rs 212.25 a share.

The company’s stock price hasn’t moved in the past five years and the flurry of memes on social media indicates the investor’s state of mind. Here’s a look at them:

Fire under the belly

In the choppy session of May 14, 2021, one stock that was standing against the investor expectations was ITC as it ended with gains of over 4.8% compared to a 0.08% gain in the Sensex.

Many experts are of the view that smart money is moving into defensive stocks like ITC for the purview of the capital protection. At the same time, few brokerage houses are bullish on the stock.

Geojit | Target price: Rs 265 | Upside: 25%

ITC’s core FMCG business remains bright with a strong portfolio of trusted brands. Agri and Paper businesses are also expected to improve as the economic activity increases at the level of customers. Despite concerns regarding the impact of the ban on loose cigarettes, ITC’s long term growth story remains intact.

IDBI Capital | Target price: Rs 259 | Upside: 22%

ITC offers the perfect blend of reasonable valuation, decent growth and high dividend yield. ITC is less exposed to non-essential categories. Revenue contribution from essentials/semi essentials stands at 90% led by cigarettes and branded packaged food. Concerns on GST cess hike on cigarette (85% contribution to EBIT) by the government to meet fiscal deficit targets are temporary. In-elastic demand and the ability of ITC to hike prices would support the bottom-line. ITC to continue growing profitably in the branded FMCG business with renewed focus on health and hygiene. In hotel business ITC will emerge out stronger from the current pandemic led by cash flow support from strong balance sheet compared to competition.

ICICI Securities | Target price: Rs 245 | Upside: 15%

ITC’s allocation strategy for ITC has changed with completion of capex in hotels business and stabilization of FMCG businesses. The company has taken a different approach to grow the FMCG business by on the one hand restricting the foray in any new category & on other hand aggressive new launches in existing packaged foods & hygiene category to improve its market positioning. However, we believe overhang of subdued growth in cigarettes would continue to weigh on valuation multiples.

(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing)