But NTPC actually offers the best of both worlds. NTPC has been going cheap, again because the market is enamoured by renewables and unenthused by thermal energy, which is NTPC’s mainstay now. NTPC Ltd in that sense is really a play on the economy, except that being a utility, its returns are capped. In fact, it is a proxy for the economy, too. If banks are a proxy for the economy, power is the proxy for the manufacturing sector. At some point, a spin-off of the various businesses may unlock value embedded in the different businesses. As the economy normalises, ITC’s other businesses too are expected to see a decent bounce back. This sets the stage for better recovery from Q3 unless a third wave hits the country. ITC has said cigarette volumes saw smart recovery during the September quarter (Q2FY22) with volumes towards the end of the quarter at near pre-pandemic levels. ITC cigarettes business is seeing a good recovery after the second COVID wave. CAGR refers to compound annual growth rate. “ITC offers an attractive 5 percent FY23 dividend yield and we expect double-digit earnings CAGR over FY22-24,” wrote Kunal Vora of BNP Paribas Securities India Pvt Ltd in a report on October 28.
But then, cash flows are for real and stock market probably can’t ignore that for long, especially in a market where stocks offering stable growth are overpriced.
The government’s move to continuously raise taxes will depress volume growth in the business that delivers around 85 percent of profits (earnings before interest and tax) for ITC. That has not happened so far because not only tobacco as a business is loathed by global investors for the health hazard that comes with it, markets also fear declining tobacco sales as a threat to growth. The stock has been undervalued for sometime, testing the patience of investors waiting for the value to unlock. But tobacco major ITC fits into this bracket. In a market where valuations are elevated, it’s a rarity to find a bluechip stock available cheap. This Diwali, we have picked up the following four value stocks for you. Of course, what goes into that valuation could be divergent but largely the idea is not to pay excessively for growth expectations. Value investing is about buying stocks that are trading at prices lower than the company’s worth fundamentally. For conservative investors for whom capital protection is a priority, buying value stocks makes tremendous sense. The upshot: stocks are richly valued across the board. Of course, ample liquidity also helped matters. The Indian stock market staged an outstanding performance since last Diwali, primarily on the hopes of faster recovery from the adverse impact of the pandemic. Unlocking opportunities in Metal and Mining Finq.Sustainability 100+ Pharma Industry Conclave.Interview Series Business In The Week Ahead.
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