Reliance Securities has reiterated 'Buy' on ITC with target price of Rs 390.

Commenting on the investment rationale, Reliance Securities said, ''Overhang of stringent government regulations, including ban of loose cigarette sales has been impacting the revenue of company’s mainstay cigarette business (for 1QFY16, the cigarette revenue declined by 1.2% yoy). However, higher cigarette realization has ensured strong segment profitability.

The company's focus on FMCG business (ex-cigarette) is promising (given the company's deep distribution) and so far all brands of that business (Fiama Di Wills, Sunfeast and Yipee) have been staunch challenger to the established brands.

We like ITC for its diversified presence across FMCG, Hotels, Agriculture and Paperboards businesses and reiterate our Buy recommendation on ITC on attractive valuation with target price of Rs 390.''

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