ITC shares: High worth traders Prashant Jain, Rajeev Thakkar take opposing views on ITC

MUMBAI: On even the most effective of days, ITC divides the opinions of traders. By any metric, it’s the most talked about inventory within the Indian fairness panorama and generates fervent views from market contributors, the likes of which had been assumed to be restricted to political points.

Amongst home institutional traders and analysts, nonetheless, ITC has remained a favorite worth inventory. Such is the cult standing of the inventory amongst value-oriented fund managers that having some shares of the cigarette-to-biscuits firm of their portfolio is seen as a badge of honour.

On this context, the views of two of essentially the most revered worth traders in India — HDFC Mutual Fund’s CIO Prashant Jain and PPFAS Mutual Fund’s CIO Rajeev Thakkar — is price a detailed look. Each have turn out to be well-known for his or her near-religious devotion to the artwork of worth investing in its most conventional sense. But, their respective fund homes’ views on ITC look like remarkably totally different.

Because the finish of February, each the veteran fund managers have taken a divergent view on the fast-moving shopper items firm. Jain’s HDFC Mutual Fund has offered ITC shares each month, whereas Thakkar’s PPFAS Mutual Fund has purchased the scrip constantly in that interval, information compiled by East India Securities confirmed.

For the aim of study, shares of ITC held in arbitrage funds had been excluded.

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HDFC MF’s promoting spree in ITC, nonetheless, precedes the present six-month streak. After accumulating greater than 130 million shares of ITC in April 2019 to April 2020, Jain has offered greater than 84 million shares of the corporate between Could 2020 and final month, barring a couple of months of shopping for in between.

For HDFC Mutual Fund, trimming their allocation in ITC is akin to taking it on the chin as the worth of the inventory fell from a mean of Rs 250 in the course of the part of accumulation in April 2019-April 2020 to a mean of Rs 198 in the course of the part of drawdown in Could 2020 to August 2021.

For Thakkar, ITC was a chance born out of the pandemic crash of March 2020. In that month, PPFAS Mutual Fund entered ITC by buying 7 million shares. Since then, it has added the inventory roughly each month to lift its holding to 57 million shares as of August. “We’re latest patrons in ITC, after the change in ITC’s capital allocation technique. It isn’t that ITC is a horrible firm when it comes to fundamentals, however as a result of the inventory value has gone down, folks have began to beat it,” Thakker had mentioned final yr, explaining why his fund purchased the inventory.

Up to now three years, shares of ITC have sunk 30 per cent, whereas the Nifty 100 has risen 52 per cent and the Nifty FMCG index has climbed 32 per cent on the identical time.

Thakker mentioned most of the wrongs completed by ITC when it comes to capital allocation over the previous decade had been getting corrected by the administration, as was evident in its promise to curtail capital funding within the lodge enterprise and enhance shareholder payout through dividends.

A lot of the analyst neighborhood, too, stays gung-ho on the inventory. Out of the 29 analysts that cowl the inventory, 16 have a purchase name, 5 have an outperform or equal name and 7 have a maintain or equal suggestion. The typical value goal of the 29 analysts for ITC is at present at Rs 254, implying positive factors of as much as 19 per cent.

Brokerage agency CLSA World Markets not too long ago reiterated its purchase score on the inventory because it steered that accidents associated to capital allocation had been unlikely sooner or later and that the non-cigarette FMCG enterprise was on observe for an annualised progress of over 30 per cent. “After the fictional character of Dr. Evil, ITC appears to be essentially the most evil factor on the earth, going by the feedback and questions we preserve getting,” Thakker had mentioned in October final yr.

Whether or not ITC will ever repay Thakker’s religion stays to be seen. However the divergence within the views of the 2 celebrated worth traders within the firm typifies the trials and tribulations in being a participant within the ITC journey.

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