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Our Bureau

Kolkata , March 28

THE ITC stock, after the announcement of the massive expansion plan for next five years on Saturday in both tobacco and non-tobacco businesses, initially went up in today's trading but closed marginally lower.

According to dealers and analysts, most of the big broking houses and funds, whether domestic or overseas, have not taken a call on the stock after the developments this month. "In the absence of fresh valuation, a status quo of sorts is continuing making the stock range-bound at the current level," said a dealer of an institutional broking firm.

According to a fund manager, with a P/E multiple of around 12, the stock valuation is cheap compared to other FMCG counters.

The proposed 10 per cent excise duty in the Budget for 2005-06 on cigarettes and the developments over the old excise tangle have all been factored into the current prices, according to Mr Ajit Day of Dayco Securities.

"The bonanza, expected by a section of the market from old excise case in the form of return of already paid amount of Rs 350 crore (a pre-deposit) out of the total demand of Rs 803 crore on the company, already provided for by the company in its books of accounts, may not happen," he observed.

The impact of the expansion plans perhaps would be factored in the valuation in the next few weeks when the annual results would also be available, the analysts pointed out.

According to Mr Nikhil Vora of SSKI, both the growth trajectory of bottom and topline is likely to remain steadily upward and the return on capital would start improving in the within a couple of years following fresh investments.

"The cash rich and debt free company has been investing in debt papers; return on the new investment would clearly be better in the next few years from tobacco or non-tobacco businesses," Mr Day added.

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