ITC is a value stock. Will you buy it in a falling market?

The steep fall in the market offers a chance to pick up some value stocks for the long term. India Infoline in its market update for 28 May has a list of recommendations that investors could buy. For example in the top large cap buys, they are bullish on ITC with a target price of Rs 268 per share, an upside of almost 16 percent over a nine-month period.

[caption id=“attachment_322984” align=“alignleft” width=“380” caption=“ITC remains one of the the top picks given the strong resilience in its core cigarette business.Reuters”]  [/caption]

According to their report, ITC remains one of the the top picks in their sector given the strong resilience in its core cigarette business. It also says that the removal of the ad valorem excise duty on cigarettes will help ITC maintain its pricing power and expand margins on a consistent basis. It expects ITC to report a 14.5 percent and 17 percent compounded annual growth rate (CAGR) in revenues and net profit over the financial years ended 2012-14.

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For the quarter ended March 2012, the company’s profits matched expectations by recording a 26 percent year-on-year growth due to a sharp improvement in the profitability of its cigarettes segment and reducing losses in the Fast Moving Consumer Goods (FMCG) segment. The stock has also yielded 24 percent returns in the last one year vis the Sensex 9 percent fall.

Other stocks that they are bullish on are : Bank of Baroda, ICICI Bank, Lupin, Cipla (see table below).