ITC: Women consumers a new potential target, maintain buy
- Women consumers a new potential target: As per data from the GATS, published by ‘The Lancet’, tobacco usage among women is on the rise, doubling from 10% to 20%. With just 3% of women tobacco users smoking cigarettes daily, this provides a high potential for new cigarette consumers. An average Indian woman takes up smoking at an age of 17.5 years against 18.8 years for men.
- Premiumisation to aid cigarette consumption: India’s per capita consumption of cigs is 1/15th of that of China. Having the most smokeless tobacco users in the world, India can see a rise in consumption of cigs as duplication is high and premiumisation would aid cigarette consumption. Also, Gutkha has been banned in many states like Maharashtra, Rajasthan, HP, Kerala, MP and Bihar.
Outlook and valuations: Edelweiss remains positive on ITC due to its strong distribution network and robust growth in its diverse businesses. At CMP, the stock is trading at 27.5x and 23.8x FY13E and FY14E, respectively. Maintain buy
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