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#BAT has sold 3.5% of its stake in #ITC, should you buy the stock at current levels?   Get all your stock-related queries answered by our technical and fundamental guests with Alex Mathew and Smriti Chaudhary on Ask Profit. #NDTVProfitLive   Guest List: Saurabh Jain, Equity Head, SMC Global Aditya Arora, Founder, Adlytick.in  ______________________________________________________   For more videos subscribe to our channel: https://www.youtube.com/@NDTVProfitIndia Visit NDTV Profit for more news: https://www.ndtvprofit.com/ Don't enter the stock market unaware. Read all Research Reports here: https://www.ndtvprofit.com/research-reports Follow NDTV Profit here Twitter: https://twitter.com/NDTVProfitIndia , https://twitter.com/NDTVProfit LinkedIn: https://www.linkedin.com/company/ndtvprofit Instagram: https://www.instagram.com/ndtvprofit/ #ndtvprofit #stockmarket #news #ndtv #business #finance #mutualfunds #sharemarket Share Market News | NDTV Profit LIVE | NDTV Profit LIVE News | Business News LIVE | Finance News | Mutual Funds | Stocks To Buy | Stock Market LIVE News | Stock Market Latest Updates | Sensex Nifty LIVE | Nifty Sensex LIVE

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01:52 - Good morning and thanks so much for joining in.

02:01 You're watching Ask Profit on NDTV Profit.

02:04 My name is Alex Mathew and with me is Smriti Chaudhary.

02:06 We'll take you through the next half an hour or so of trade.

02:09 And if you've got questions for us

02:11 on stocks that you either own

02:12 or would like to buy,

02:14 you can send them to us on the WhatsApp number

02:15 that's on your screen right now,

02:17 or in fact on any one of our social media platforms.

02:20 It's a bit of a tough day for the equity markets

02:23 and it's selling that is intensifying

02:26 as we go through the session.

02:28 You have the benchmark that is trading very close

02:29 to the low point of the day and down about 8/10 of a percent

02:33 and if anything, the pain is far more visible

02:36 in the broader end of the markets

02:38 and you have the mid cap 150 index

02:40 it's down quite considerably, down about 2.7%

02:43 also at the low point of the day

02:44 and the small cap index down about 3.6% or thereabouts.

02:48 Now, if you are to look at the last five days,

02:52 then this is a trend that is quite visible

02:55 and in fact you will see that the FT50 is barely lower.

02:58 Of course, if you account for today's downside,

03:01 then you'll see cuts of about a percent or thereabouts

03:05 but the drop for the broader markets

03:07 is far more considerable.

03:09 The small cap index over the last five days or so

03:12 losing about 5% or thereabouts.

03:15 Now, let's look a little bit deeper

03:17 into the key indices that are contributing to this

03:19 and you have read across the board today.

03:22 In fact, there's only the FMCG pack

03:24 that's more or less staying in the green,

03:27 down up about a percent but everything else

03:30 from the energy pack to metals, to media, to reality,

03:35 reality is losing considerable ground.

03:37 On the back of selling yesterday as well

03:39 and in fact, let's also look at the key Nifty 50 contributors.

03:43 You have quite a few losers on the benchmark Nifty 50.

03:47 In fact, Larsen and Toubro losing the most ground.

03:50 On the other end of the spectrum, on the gainer side,

03:53 you have ITC which continues to stay in the green

03:57 and is gaining ground even as we speak right now.

04:00 Of course, it is off the high point of the day,

04:04 it's up still about 6% or so

04:06 and that in fact is the focus of today Smriti.

04:09 - Yes, good morning Alex. - Morning.

04:11 - ITC is definitely the stock of the day.

04:14 Among sea of red, it's the only positive sign

04:18 and this comes after the promoter company,

04:22 British American Tobacco has sold 3.5% stake in the company.

04:26 But the broader question here is,

04:29 is this now a good time to buy ITC?

04:32 And to talk about it, we have my colleague Mahima

04:36 joining in to give us key details on that.

04:39 - Right, so before I move on to what the valuations

04:42 look like at present for ITC,

04:44 just a quick review of how the stock has performed.

04:47 Well, ITC stock did not perform well from 2013 to '18

04:52 and this was because of sales, EBITDA, PBT,

04:54 everything grew at a CAGR of around 6 to 8%

04:57 and there was an increased taxation on tobacco

05:00 and there was implementation of GST as well.

05:02 So the ITC stock was under pressure between these years

05:06 but from 2019 to 2023, there was a 9 to 10% CAGR growth

05:11 in sales in EBITDA for ITC.

05:13 The taxation was stabilized for tobacco

05:16 and 12% CAGR was seen in PAT.

05:20 So that is why the ITC stock performed very well.

05:22 In fact, in 2022, the stock has rallied a lot.

05:26 So the stock nearly doubled in 2022 actually.

05:30 And the PE ratio during Feb 2022 was around 18.

05:34 The current PE from today,

05:36 today's stock rises around 20 times at present.

05:40 And if you take a five year median of the PE,

05:43 it's around 22.

05:44 And the highest PE in five years has been 34

05:47 and the highest PE in two years has been around 32.

05:50 So even if you talk about the earnings expectations,

05:54 well, for FY '25, around 18 EPS is expected and 26, 20

05:59 and it keeps growing by FY '27,

06:01 the estimates show around 23.4 EPS.

06:04 And if you talk about the analyst rating also,

06:07 92% say buy, only 5% say hold and 3% say sell.

06:11 So overall, the street view is also saying

06:14 that it's a good time to buy ITC.

06:16 However, we can just wait and watch

06:19 on how the stock will play out to be.

06:22 - Thank you, Mahima for that.

06:23 On that note, let me introduce you to the guests for today.

06:26 We have Saurabh Jain, Equity Head,

06:28 SMC Global and Aditya Arora, founder of Adlytic.in.

06:33 Our both joining in.

06:35 Thank you so much Aditya and Saurabh for joining.

06:38 Saurabh, let me come to you first on ITC.

06:40 Now, if you look at the PE valuations,

06:42 it's closer to the lower end

06:44 than the highest that we've ever seen for ITC.

06:47 We've seen this overhang of promoter selling,

06:50 now that's over.

06:52 A lot of things have worked out for ITC.

06:55 Would you suggest buying at this juncture?

06:58 - Hi, good morning.

06:59 Thanks to you for having me on the show.

07:02 See, if you look at the business,

07:03 most of the things I think your colleague has already covered

07:06 but if you see the companies consistently focusing

07:10 on its core areas, I mean, see the FMCG business,

07:14 it is showing good amount of growth

07:15 in contrast to the sphere in the FMCG industry.

07:18 The margins are also going,

07:20 they are coming up with the newer product categories,

07:25 newer categories, for example, in the dairy

07:28 and the beverage business,

07:30 the company is expecting in the next six to nine months,

07:33 very good growth coming in.

07:34 Hotel business is doing well,

07:36 paper business is also doing well.

07:38 So all the businesses are putting up a good show

07:40 and on top of it, the valuation is also compelling

07:44 in contrast to the FMCG peers.

07:46 So it makes all the more sense to check in for the long term

07:49 for investment in the ITC.

07:51 - Got it.

07:52 It so happens that we've got a couple of questions

07:54 right off the bat on ITC.

07:57 And the first one is an options trade.

08:00 We've got Siam who's sold a 460 call of ITC.

08:05 And he's wondering what his strategy should be.

08:09 The stock is up over 6% in trade today.

08:12 Aditya, what should he do?

08:14 - Look, the stock is up by a massive 6% today.

08:20 So I think there should be a defined stop loss

08:24 in the system at the first place.

08:27 And even if the trade goes wrong,

08:28 one should follow stop loss.

08:30 But at this point in time,

08:32 what he can do is that establish a stop loss at 445.

08:37 If that level is crossed 445,

08:42 then he should exit from this trade

08:43 because that would create a case for fresh rally

08:48 towards 480, 490.

08:52 So in case the stock crosses 445,

08:55 what he can do is that he can sell in the money call option

09:00 because he's losing in,

09:02 he can sell in the money put option

09:05 to create a bullish bias

09:08 so that he can cover up the losses

09:09 which he made in bearish position.

09:12 So I'm telling a level specific recommendation.

09:16 If 445 is crossed,

09:18 he can turn his bearish bet into bullish bet

09:21 and the targets over here would be 480 to 490.

09:24 - Got it.

09:25 And the stop loss that you've pointed out.

09:27 All right.

09:28 There's also a fundamental question, Saurabh.

09:30 This one's for you.

09:31 You've already spoken about ITC, but specific.

09:35 We've got a viewer that is bought,

09:36 we've got Pranay that is bought at 404.

09:39 It's at 429.

09:40 Should he continue to hold is a question.

09:43 Is it the right time to buy HDFC Bank?

09:46 If I interpret this correctly,

09:48 would you book profits in one and move to HDFC Bank?

09:50 - I would recommend to hold on to ITC.

09:53 I mean, ITC will consistently grow

09:56 and the management is quite confident.

09:58 In the last turning season,

09:59 the management comments points towards that.

10:02 So in my sense, it is better to hold ITC.

10:04 I think HDFC Bank will be a slightly contrarian bank

10:07 because the management is already guided

10:09 that they would go for a slower credit growth this year

10:12 because they want to boost their CASA ratio

10:17 after the merger with the HDFC.

10:19 So I think it will take some time

10:20 and the stock will rest for the next two, three quarters.

10:23 I think we better wait for next two, three quarters.

10:25 And then if there is a progression

10:28 according to what management has guided,

10:30 then I think it makes sense to jump into HDFC Bank.

10:33 - All right, Saurabh.

10:34 Next up, we have a question from Marut.

10:37 And we're talking about QSR space now.

10:40 So the likes of Divyani International Restaurants,

10:42 Brand Asia.

10:43 He says that if this is a good time to accumulate the stock,

10:47 the shareholding till February, 2024 has seen a...

10:51 So we've seen DII is putting money into it,

10:53 but the stock haven't done too much.

10:56 So would you suggest from a longer term perspective

10:59 to get into the QSR space

11:01 and what stocks would you recommend?

11:03 - See, for the QSR space,

11:09 I think we don't have any specific stocks

11:13 that we have recommended to our clients.

11:15 But I think it is more important

11:17 to get into the main sectors of the market.

11:20 For example, IT, banking, and maybe pharma stocks.

11:23 So in the IT pack, we are recommending TCS,

11:27 HCL technology in the banking.

11:28 We are recommending ICICI, Union Bank, Indian Bank.

11:31 In the pharma space,

11:32 we are recommending Netco and Elembic Pharmaceuticals.

11:36 - All right.

11:37 We've got Pranay's question that has already been answered

11:40 and Geeta is asking this next question.

11:42 She's asking for a view on Adani Power for the long term

11:48 and what levels can she buy at?

11:50 I guess she's asking this based on the fundamentals.

11:54 Saurabh, do you have coverage?

11:56 And if so, what's the view here?

11:57 - See, power sector, I think it is a very good growth story.

12:02 And it appears that the sectors will continue to grow.

12:06 Adani Power, we don't have any buy recommendation,

12:08 but in the power sector,

12:09 we are more bullish on the NTPC and GSW.

12:13 - Okay, fair point.

12:14 But let me try and get, Aditya,

12:15 if you can give us a view on the technicals on the charts,

12:19 what should the strategy be for the longer term?

12:21 - So for Adani Power,

12:24 I think a good support would be 430 to 440.

12:29 If we take a broader view,

12:32 I think 410 to 440 is a good level to accumulate the stock

12:37 because at that point, at this level,

12:40 there are a lot of gaps.

12:42 So in case the correction intensifies from here,

12:46 then 400 to 440 is a good band to accumulate.

12:50 In case we see end of correction in this week,

12:53 then probably the stock could take support

12:56 at levels like 480 to 500.

13:00 So that band would be a good band to accumulate the stock.

13:04 And if she wants to play momentum,

13:07 then we can see a fresh breakout above 580.

13:11 Even in that case,

13:12 the stock will see a fresh rally towards 620 to 650.

13:17 - Standard disclaimer here,

13:20 the NDTV Group is owned by AMG,

13:24 which is an Adani Group company,

13:26 and this is NDTV profit.

13:28 We have to slip into a very quick break.

13:30 There's more on the other side.

13:31 We'll be taking more questions, so do stay tuned.

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19:00 - Welcome back, you're watching Ask Profit.

19:07 Let's quickly dive into the questions.

19:09 The first one is on IRFC,

19:11 and this is from Pranav Singh.

19:16 Now he's bought the stock at 159,

19:20 so slightly elevated levels

19:22 from where currently the stock is trading

19:26 at around 126 apiece.

19:28 We're seeing a very sharp downturn, Aditya,

19:31 across PSU stocks, especially this one, IRFC.

19:36 I think it is, in the last one month,

19:38 it has corrected about 18% or so.

19:41 Would you suggest holding on to this stock

19:44 from a shorter-term perspective,

19:46 or is there more pain in the stock?

19:47 - Absolutely.

19:50 Looking at the charts,

19:51 there seems vertical fall from the top,

19:54 hence institutions are less interested in this counter,

19:57 and selling pressure is pretty intense.

20:00 So I think he may get a chance to get in at lower level.

20:07 At this point in time, it seems a little expensive

20:10 and seems like a falling knife.

20:12 He may get a chance to accumulate the stock

20:15 at around 118 to almost 110 levels.

20:19 So that would be the right price to get in,

20:22 and second one would be 100.

20:26 So these are the right levels to get in.

20:28 At this point, I think he can save little bucks

20:31 by being a little underweight on this counter.

20:35 - You have a point.

20:36 Paytm is the next one we're talking about.

20:38 We haven't spoken about it in quite a bit,

20:40 but we've got Karan that is asking about this.

20:43 He's bought at levels of 407.

20:45 The stock is currently at 350, down nearly 5% in trade.

20:49 It's not something that we know the whole story about,

20:54 and this is, I guess, something that we will come to know

20:56 in the coming weeks and months how things span out.

20:59 Would you hold on to this with the expectation

21:03 or the hope that something would turn around for the business?

21:07 - I think there is no point in betting on hope.

21:09 The business model has already been challenged.

21:11 There is a lot of regulatory apprehensions also.

21:13 So in my opinion, when the market is also tanking down,

21:16 I think this stock can further follow.

21:19 So I think it is better to get out of this stock.

21:21 We are losing approximately 10 to 15% of the money.

21:24 Better to jump in the good stories and the same.

21:27 - All right, got it.

21:29 Next up, we have a question from Priya,

21:32 and the stock that we're talking about

21:34 is Capacite Infra Projects.

21:36 Now, Priya bought the stock at slightly elevated levels

21:40 at 272 apiece.

21:43 It's currently trading at around 228.

21:46 So a considerable amount of loss, Aditya.

21:49 On the charts, do you think this sort of downtick

21:54 is going to continue for a while?

21:55 - I think the stock has already reached its support levels.

22:02 So from this point, I think the selling could be less intense

22:08 and she should wait a little while

22:10 because I think there's possibility of bounce back from here.

22:14 Although, look, if the market correction intensifies,

22:18 then any stock can fall.

22:19 But at this point, there's a lot of support

22:22 at these levels of 230, 220.

22:25 So if the buyers come in picture again,

22:28 then let's go for reversal till 240 to 260.

22:33 - You know, I'm going to stop taking questions just for a bit

22:39 because I want you to look at the markets.

22:40 You have the benchmark Nifty 50 that is down about a percent

22:44 and very close to the low point of the day.

22:46 And take a look at the small cap index.

22:48 It's down 3.75%, nearly 4%.

22:51 So the cracks are widening.

22:53 There is significant selling.

22:55 So I will take this moment to ask both our experts

22:58 what the strategy should be at this current juncture.

23:02 We've been saying, Saurabh, for some time

23:04 that there is possibly a little bit of froth at the broader end.

23:08 And if we look at the last five sessions,

23:11 then some of the names that have run up very substantially

23:13 have seen substantial drops.

23:16 And this seems to be something that is not necessarily

23:18 going to go away very quickly.

23:20 Does this call for a reallocation?

23:23 - Certainly. I think there's a lot of money

23:27 which has gone to the small cap and mid cap side of the market

23:29 and the valuations have already gone off the roof.

23:32 I think all the experts were talking about the correction

23:36 which is likely to come.

23:37 It was not coming since October, November last year.

23:40 But now it has, I feel it has just started.

23:42 I mean, I feel that there is more room for the correction

23:47 to go in this month or maybe going in next month.

23:50 It is better to exit from the lower end of the market,

23:54 lower end of the stocks,

23:55 and better to focus on the large caps.

23:57 In the large cap category, we like sectors like that.

24:00 I have spoken pharmaceutical power in banking and IT.

24:04 I think these are the four sectors,

24:06 capital goods along with it.

24:07 I think these are the main sectors which you can focus on,

24:09 especially on the large cap side.

24:12 - And in a market like this, Aditya,

24:14 where you look at momentum going the wrong way, right?

24:18 Where that's just starting to build.

24:20 Where do you duck for cover?

24:22 And how do you position yourself

24:24 if you're relatively shorter time frame?

24:27 And maybe if you're a trader.

24:30 - True, true.

24:31 Look, there are a lot of spaces where one could hide.

24:36 I think, look at FMCG counters like ITC.

24:40 Look at other FMCG counters

24:42 which are relatively outperforming the market.

24:44 Wherein you are seeing cracks of almost 4 to 5%

24:47 in PSU counters, small caps, etc.

24:50 But FMCG counters are relatively stable.

24:53 A lot of them are green or a little bit down.

24:56 That is one space to hide in.

24:57 And the second one would be banking space,

24:59 which is showing incredible outperformance.

25:02 And I think the larger ones are even showing short covering.

25:07 A lot of short contracts are being unbound

25:10 in a lot of large banking names.

25:12 So I think that's an excellent hiding space.

25:15 And one could stay there

25:17 because I think a good rally is underway over there.

25:22 So banking is a very good space to hide in.

25:25 And I'm very optimistic, you know,

25:27 about a rally in large cap banking names.

25:31 - All right, got it.

25:33 Now, while we're on the topic,

25:35 we have a very similar question from Mr. Ahuja.

25:40 Now this is on Reliance.

25:42 Now, Aditya, this is for you as well.

25:45 He says that he's sold two lots of short sell

25:49 in Reliance Industries.

25:52 And for March expiry with a strike price of...

25:55 - 3000. - 3000 at 28 rupees.

25:58 Should he book losses at the current market price

26:00 is the question.

26:02 So Aditya, what would you suggest doing here?

26:08 - Can I see the question again?

26:09 He told that... - Yeah, so he's gone short.

26:12 He's gone short.

26:13 Let's pull up the market price currently

26:15 for Reliance Industries

26:16 and see where it's currently trading.

26:19 It's at 2910.

26:21 Yeah, so he's got...

26:23 He's saying that, look, I'm reading this out.

26:25 He's saying he's sold two lots

26:28 for March expiry at a strike price of 3000

26:31 at 28.

26:32 Should he book loss

26:34 or should he hold out for the next expiry?

26:38 So he has mixed two things together.

26:43 Yeah, in future there are no strikes and options.

26:46 If he has done options, there shouldn't be future.

26:48 So we don't know whether he's talking about call or put.

26:52 But we'll discuss the general outlook for Reliance.

26:56 I think if he had sold the calls,

26:58 then he can book the profit now.

27:02 Understood.

27:03 We are completely out of time on this edition of Ask Prophet.

27:07 Thank you so much, Saurabh and Aditya for joining in

27:09 and for answering so many questions for us.

27:12 And viewers, thanks for tuning in.

27:14 If you were not able to take your questions today,

27:16 we'll definitely try and take them tomorrow.

27:18 Come back at 11.30 and we'll get all your questions answered.

27:22 But stick around.

27:24 We have lots more coming up on NDTV Prophet.

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ITC In Focus | Ask Profit | NDTV Profit

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