LARGE CAP
Motilal Oswal Securities
ITC CMP: Rs 210
The cigarette industry was pleasantly surprised to see unchanged excise duties on cigarettes. We estimate 4% volume growth for ITC in FY10 and FY11. The Agri division has exited low-margin commodity businesses and focusing on high-margin leaf tobacco exports, which will increase overall margin. ITC has appreciated by about 12% post budget.
NESTLE INDIA CMP: Rs 1,997
Nestle India is best placed to ride on the expected growth in processed food market due to strong technology of the parent company. Nestle has taken several steps to increase volume growth — increased focus on popularly positioned products, lowered the entry-level price point in chocolates from Rs 3 to Rs 2, increased ad and marketing expenditure. MID CAP
India Infoline and Sharekhan
BRITANNIA INDUSTRIES CMP: Rs 1,580
Britannia’s sales growth remains robust. The continued consumers’ shift from unorganised to branded biscuits will stimulate strong growth in premium biscuits. Strategy of focusing more on the branded biscuit category, would help Britannia to improve the profitability. We expect the company’s EBITDA margin to expand in FY11.
MARICO CMP: Rs 81
Marico received approval from the Bangladesh Securities and Exchange Commission to list its 100% subsidiary in the country, known as Marico Bangladesh (MBL). The Bangladesh operations of Marico achieved sales and net profit of Rs 225 crore and Rs 25 crore respectively in FY09. The business has grown at a CAGR of 71% over 3 years. SMALL CAP Invest Shoppe India RUCHI SOYA CMP: Rs 33
Ruchi Soya is one of the largest players in the domestic edible oil market. It has the largest processing capacity in India. However, there were lot of volatility in the commodity prices but it has been able to register a consistent growth. Also, once the oil prices starts climbing up it is going to reap the benefit. MCLEOD RUSSEL CMP: Rs 118
The tea price boom helped McLeaod Russel to post 61.48% growth in its net profit in last quarter. It plans to acquire Vietnam based Phu Ben tea company for $2 million. McLeod, being the world’s largest bulk tea player, will continue to gain from increased preference to tea world over.
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