Attractive ITC stocks fail to cheer investors due to GST concerns

Expectations of additional tax burden in GST Council meet, competitive intensity may impact volume growth and margin of its mainstay cigarette biz

Even as pricey stock valuations of many fast-moving consumer goods (FMCG) companies are making the Street uncomfortable, some stocks like ITC are unable to find good investor support, despite attractive pricing.

The stock of ITC, which was trading at around 20x its 2020-21 (FY21) estimated earnings in the past few months, has seen further deterioration in valuation. 

It is now trading at 17-18x its FY21 estimated earnings — the lowest in five years (on the basis of one-year forward valuation).

A subdued volume outlook, long with expectations of an increase in the compensation cess on cigarettes in the upcoming goods