ITC - A safe pick, says Rajesh Jain

Rajesh Jain, Market Strategist, in an interview to ET NOW said that ITC was one of those safe picks, which can be recommended at any point in the trajectory of the market.

It has again been a stellar quarter for ITC. Is this why you think that a good spike came in for the stock?

There has been a bit of a bad news on the excise front but what the numbers will confirm or are confirming is that the volume growth has not taken a hit and ITC has tremendous hidden value in hotels. The full impact of depositories of that business is still not reflecting in the ticker because it has been seen largely as an asset play drag on the counter, which otherwise has a cash surplus. The seeding cost of the consumer businesses, which had been a substantial drain over the last 3-4 years has started mitigating and now, by and large, the investing community expects the drain to be cut off and the businesses to start contributing, at least at the operating profit level. So with these two hidden positives, it is not at all a surprise that the negative on cigarette prices, the end consumer price is being taken in its stride. It would be interesting to see how much of cash the company really generates and how are they taking the entire model forward. It has been one of my top picks and I personally think you will easily see a Rs. 100 getting added from hereon over the next 15-18 months.

I am guessing that you would not play the other FMCG companies because you quite like the hotels business in ITC?

No, ITC is easily one of those safe picks, which you can recommend at any point in the trajectory of the market these days. But, the star performer in FMCG has to be the Godrej Consumer business. The kind of brilliant work they have done over the last quarter or so speaks for itself and any investor really looking to get better than market gains vis-à-vis the FMCG pack or vis-à-vis the market, has to really be looking at what Mr. Godrej is doing in the consumer business.