ITC worth buying

ITC Limited, is one of India's foremost private sector companies with a market capitalization of more than US $ 10 billion and a turnover of US $ 3.5 billion. Rated among the World's Best Big Companies by Forbes magazine, ITC ranks third in pre-tax profit among India's private sector corporations.

List of Products and Brands

ITC has a diversified presence in

• Cigarettes: Wills, Insignia, India Kings, Gold Flake, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake


• Hotels: ITC-Welcomgroup Hotel Chola


• Paperboards & Specialty Papers:Classmate, ITC Bhadrachalam Paperboards Limited


• Packaging: BILT Industrial Packaging Co. Ltd


• Agricultural Industry: Agri-Business, Leaf Tobacco, Gold Ribbon, Blue Ribbon, Aqua Kings, Aqua Bay, Aqua Feast and Peninsular


• Packaged Foods & Confectionery: Kitchens of India, Aashirvaad, Sunfeast, Mint-O, Candyman


• Branded Apparel: Wills Lifestyle, John Players, Essenza Di Wills


• Greeting Card: Expressions


• Information Technology: ITC Infotech India Limited


• Safety Matches: iKno, Mangal Deep, VaxLit, Delite and Aim

Cigarettes:
Although the ITC has diversified products, the primary business is cigarettes. ITC holds the most famous brands of cigarettes in all prices attracting (or spoiling) the people with all economic statuses.

The business on cigarettes will never or rarely come down. Currently, there is no chance for the government to ban Tobacco and cigarettes. Also, the smokers very rarely quit. More than the people who quit, many more are getting addicted to cigarettes.

So, in terms of revenue ITC is very safe or risk-free with its business in cigarettes.
As more people are leaving out beedis, gutka and chewing tobacco, the consumers of cigarettes seams to increase drastically.

Also, whenever the government increases tax on cigarettes and other tobacco products, the cigarette companies can easily increase the price and increasing the profit margin along with the tax.

Paperboards & Specialty Papers
Other than the Cigratte business, the paper boards are the next major component of ITC's business. ITC is a market leader in Paperboards also.

FMCG
ITC has entered the FMCG business and attracted a good business with its two famous products - Aashirvaad packaged food products, Sunfeast biscuits. ITC's entry into the FMCG business will add a good source of income for the company.

With all these valuable business ahead, ITC looks very attractive as a long-term investment.

Technical Analysis
The ITC stock is currently quoting at Rs 184.95/ as on Oct 23, 2006. It has a strong resistance at 193/ and a strong support at 185/. Once the resistance is broken, it has its next resistance level only at Rs 212/. Till then, ITC will have a very free upward movement. At the negative side, there are two important support levels one at 165 and another at Rs 150.

When to Buy?
As the stock price is almost at the support level, we can enter new positions now, for about 30% of the planned investment amount. As we are expecting the Q2 results on Oct 30, the results will directly influence the stock price. As ITC is looking for business expansion, the expenses might have increased a little, if this is the case, the stock price may go down out of panic, because of few short term traders and for booking profits. But, if the profits has really increased, the stock price will increase. So, instead of timing the market, we can invest another 30% after the results, thereby averaging the cost. The remaining 40% can be done whenever a dip occurs or as 10-15% every month.

Another important fact we should remember is, as the Q2 results will be announced for most of the stocks within next month and if the results where not fruitful overall even if it is for other industries, other sector, the market sentiment may affect ITC also. So, have some cash ready to invest during dips (if at all something happens) or buy even if it keeps increasing.