ITC Possible 25% upside

ITC (CMP: 172.20)
Date: 12 Oct 2020

Interesting setup in ITC . Today's price has broken the falling trendline and most important point to note is that the volume breakout is 3 times than the avg . volume in the last 40 days. The only concern is that today's inverted hammer candlestick couldn't give breakout above the 20 DEMA . However, since Covid, whenever RSI in ITC has gone past 40 levels, the stock has given a good 15% - 25% price appreciation. Also, the current PCR level is 0.45 which is a good sign for price reversal. Strong conviction will come if stock is able to hold the current levels and go past 175 with good volumes. Considering festive season is round the corner and the stock has already got beaten down so much I think the stock can go upto 200-210 levels.

I will be closely watching the stock this festive season.

T1-180. T2-190, T3-200; SL-160. Trail the stop loss by every 10 points once it starts achieving its target levels.
Duration 1.5 months. ( 30 Nov 2020)


+1 Reply
2lakh Cr. Market cap company, sales only <50000 Cr yearly basis.
Promoters holding 0
Liability is more than 75000Cr

I personally don't think ITC should be any radar for long term till balance sheet shows improvement, however small quantities can be taken at this level
+1 Reply
@ghaiatul, out of Rs 77000 crore liability.. Rs 62000 crore is reserves and surplus
@ghaiatul, You should take out some time and learn how to read financial statements.

1. Many good companies have their sales figures <20% of their market cap. That does not mean in any way that it's a negative point because SALES has nothing to do with market cap. Other examples are TCS.
2. Promoter holding is zero because it is a professionally managed company. Other examples are Larsen & Toubro.
3. Liability holds 64,000 Crs. as Reserves and the debt and other liabilities are peanuts in comparison to the strength of the assets.

Adding more to it, the company has the most FCF in the all the FMCG peers. Plus NPM% is more than 20% of the revenue with all the Liquidity, Solvency and Performance ratios intact.

READ AGAIN. And take out some time to read how to analyze financial statements.
ghaiatul tradeandtequila
thank you very much for giving me additional points where i can work upon to read & analyse financial statements.
can you you give me any probable reason for falling of ITC share to this extent.

thank you once again.
Kotha_Rao ghaiatul
@ghaiatul, That is only interpretation as per SEBI norms for promotion. ITC has strong promoters in British Tobacco, who holds 25%.
Also, Govt. of India thru LIC/UTI etc holds big junk
Results to be out in a couple, if positive then T1 in your analysis is for sure guaranteed.
It is in decrease curve from 12th Aug 20 to till today 15/10/20( L-158-h204). even in mar 20 this has not taken a big correction. since market has come down today and it is still in the down side, what price u recommend to enter for your cited tgt.
I don't think the analysis is accurate because the tilt of the channel is ~45 degrees. It is just an indication of the sellers' fatigue.
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