Buy ITC: Motilal Oswal

otilal Oswal has maintained its buy rating on ITC in its November 5, 2008 research report. "High conversion of plain to filter is a big positive and concern of a sharp volume decline has been arrested. Margins are expected to improve as the full impact of price increase will be reflected in 3QFY09 onwards. New FMCG business
would continue to remain under investment mode and is likely to post a loss of Rs 4 billion in FY09."

"Management has indicated new personal care launches in 4QFY09. Operating margins in the Paper & paperboard segment are expected to improve in the coming quarter as there is a decline in coal prices and 120000 TPA pulp units capacity will get stabilized. New 100,000 TPA writing and printing paper units will boost the performance going forward. Management has guided for lower sales and profit growth in Hotel business due to global melt down. The stock trades at 18.9x FY09E EPS of Rs 9 and 16.3x FY10E EPS of Rs 10.5. We maintain Buy," says Motilal Oswal's research report.