HDFC Securities says that ITC has a diversified presence in cigarettes, FMCG, hotels, packaging, paperboards & specialty papers and agri-business. Apart from having a near borderline monopoly in its traditional business of cigarettes, ITC is the country's leading FMCG marketer, a clear market leader in the Indian paperboard and packaging industry, a globally acknowledged pioneer in farmer empowerment through its wide-reaching agribusiness, and a preeminent hotelier in India - a trailblazer in 'Responsible Luxury' chain of hotels. ITC's wholly-owned subsidiary, ITC Infotech, is a specialized global digital solutions provider. 

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Technical Analysis on ITC:

HDFC Securities recommends a buy on ITC, add on dips to Rs 189 - Rs 195 range with a base case target of Rs 228 and a bull case target of Rs 250.  

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Over the past decade, the company’s relatively new consumer goods businesses have established a vibrant portfolio of many world-class Indian brands that create and retain value. ITC's world class FMCG brands including Aashirvaad, Sunfeast, Yippee, Bingo, B Natural, ITC Master Chef, Fabelle, Sunbean, Fiama, Engage, Vivel, Savlon, Classmate, Paperkraft, Mangaldeep, Aim, and others have garnered encouraging consumer franchise within a short span of time. While many of these brands are market leaders in their respective segments, others are making appreciable progress, says HDFC Securities.

The competitiveness of ITC's diverse businesses rests on the strong foundations of institutional strengths derived from its deep consumer insights, cutting-edge research & development, differentiated product development capacity, brand-building capability, world-class manufacturing infrastructure, extensive rural linkages, efficient trade marketing and distribution network and dedicated human resources. The company’s ability to leverage internal synergies across its diverse businesses lends it a unique type of competitive advantage, highlights HDFC Securities.
Capital allocation concerns resolved, expect favorable returns, going ahead: 

In terms of capital allocation, major capex in hotels and FMCG has already taken place, according to the management. The company has developed a sizable footprint in hotels and successfully entered various FMCG categories; the focus now would be to scale these businesses before incurring any further investments, which shall drive the returns, going ahead. With reduced cash requirements, ITC has changed its dividend payout ratio to 80-85% vs. 67% earlier, highlighting the commitment towards shareholder wealth creation, says HDFC Securities.

At 14.4x FY23 EPS, ITC trades at a steep discount to the FMCG sector. The company is one of the leading FMCG companies in the country and, at these valuations, there is limited downside risk, and the risk-reward ratio in the current market scenario is favourable for ITC.