Best stocks to trade today, 20 May, as recommended by Trade Brains Portal

Stocks to trade as recommended by Trade Brains Portal

ITC Ltd (Current price: ₹ 436)

• Target price: ₹ 495 in 16-24 months
• Stop-loss: ₹ 405
• Why it’s recommended: ITC is India’s leading FMCG marketer with a diversified portfolio of businesses spanning fast-moving consumer goods, paperboards and packaging, agribusiness, and information technology. The company is a market leader in the Indian paperboard and packaging industry. ITC Consumer Goods business, over the last decade, has established itself with 25+ world-class Indian brands, including Aashirvaad, Sunfeast, Yippee! And more.

ITC announced the acquisition of ABREL’s pulp and paper business, operated under the name of ‘Century Pulp and Paper,’ for a lump sum consideration of up to ₹3,500 crores on a cash-free, debt-free basis, which has an installed capacity of 4.8 lakh MTPA. Moreover, in its FMCG segment, ITC has signed share purchase agreements to acquire Sresta Natural Bioproducts Private Limited brand 24 Mantra Organic.

Also, the company has signed agreements with Mother Sparsh Baby Care Private Limited operating in the premium ayurvedic and natural baby care space. ITC acquired the balance 73.5% stake over 2-3 years in Mother Sparsh, having an investment of ₹81 crore by FY27 with a total investment of ₹126 crore.

The company reported revenue from operations of ₹61,236 crore for 9M FY25, up from ₹55,330 crore for 9M FY24, an increase of 11%. For Q3FY25, net segment revenue for cigarettes was up by 8.1% YoY, and PBIT was up by 4.1% YoY. FMCG revenue is up by 4% YoY, Agri segment revenue is up by 9.7% YoY, PBIT is up by 21.6% YoY, and paperboards and packaging revenue is up by 3.1%.

• Risk Factor: The company’s cigarette segment is highly exposed to regulations. Any material regulatory development can have a significant impact on the business.

Their revenue from the cigarette segment is highly concentrated. ITC's raw materials in agricultural commodities are exposed to climate change; it is a low-margin and highly volatile business. Variation in the crop output could adversely impact a company's operations. The company remains exposed to the impact of changes in the regulatory norms with respect to the treatment of manufacturing residual discharge/waste.

Also Read:  Seeking value in ITC and Godfrey Phillips? Tobacco stocks gain momentum in FMCG play 

ACC Ltd (Current price: ₹ 1,929)

• Target price: ₹ 2,520 in 12 months
• Stop-loss: ₹ 1,635
• Why it’s recommended: ACC Limited is a leading cement and ready-mix concrete company in India, part of the Adani Group, and is a subsidiary of Ambuja Cements. The parent company, Ambuja Cement, is the second-largest cement company, holding a dominant 15% market share. In FY25, the consolidated Ambuja surpassed 100 MTPA cement capacity and further targets 118 MTPA by FY26 and 140 MTPA by FY28. 

ACC and Ambuja combined bring 73% of the trade cement share and 29% of trade volumes in premium products, amongst the highest in the industry. In FY25, ACC Ltd. volumes grew by 13% to 11.9 million tons from 10.5 million tons, while the parent Ambuja volumes stood at 11.6 million tons, up 22% from 9.5 million tons YoY. ACC Ltd. has the highest revenue from operations compared to Ambuja and Sanghi. 

In FY25, the revenue from operations grew by 6% to ₹20,789 crore from ₹19,681 crore YoY. EBITDA stood at ₹2,088 crore, margins stood at 10%, and profit after tax grew by 2% to ₹2,402 crore from ₹2,335 YoY. 

The company has two segments: the cement business contributes ₹20,504 crore, and ready-mix concrete contributes ₹1,382 crore.

To maximize its profit, the company decreased its power and fuel cost from ₹930 per ton in FY24 to ₹727 per ton in FY25. The power and fuel costs have reduced by 22% ( ₹203/t), driven by the WHRS share up by 14% and green power mix up by 23%. The company reduced 19% of costs through acquisitions and OPEX programs. 

Further, the company targets to reduce the cost from 19% to 12% by FY28. However, currently green power consumption stands at 21% and is targeting to consume 60% of power from green by FY28. In addition, freight and forwarding costs have been reduced by 8%, and other expenses declined by 12% YoY. On a consolidated basis, the group has 62 million tons of clinker capacity and 100 MTPA cement capacity. The project under execution; other stages clinker capacity stood at 27, bringing the total capacity to 89 million tons and 40 MTPA cement capacity, bringing the total to 140 MTPA by 2028.

The company has 350 million users on its infrastructure platform. The Adani Group now operates 11 captive ships, 22 grinding units, and 24 integrated units. In India, it has more than 110,000 channel partners. The group owned 101 ready-mix concrete facilities, 10 bulk cement terminals, 82% of blended cement, and 65% of the clinker factor as of FY25. Furthermore, management anticipates that 118 MTPA of cement capacity in FY26 and 1,000 megawatts will be operational by June FY26.

By FY26 and FY28, the company anticipates EBITDA per ton of ₹915 and ₹1,500, respectively. In addition, significant projects and clinker capacity expansions will be put into service in Q1, Q2, and Q3 of FY26, with a cost of ₹3,650 per unit by FY28.

• Risk Factor: ACC is subject to the costs of raw materials, including gypsum, coal, and limestone, which together make up about 40% of the entire direct cost. A rise in the price of raw materials may put pressure on the company's profit margins.

Also Read: FPI assets top $800 billion after 4 months as markets rebound on eased trade worries

Market Recap 

On Monday, the Nifty slipped below 25,000, while the broad indices saw a minor decline. With an RSI of 63.61, the Nifty 50 closed at 24,945, down 74 points, or 0.30%, below the overbought zone of 70. During the day, it was trading above all four 20/50/100/200 EMAs. The Sensex closed at 82,059, down 271 points, or 0.33%, while trading above all four EMAs and with an RSI of 62.56.

Among the sectoral gainers, Nifty Realty closed at 933 after gaining 20.65 points, or 2.26%. Other real estate gainers were Phoenix Mills (3.3%) and Oberoi Realty Ltd (3.5%), while Raymond Ltd continued hit the 5% upper circuit following its real estate demerger. At 6,725 points, Nifty PSU Bank increased 987 points, or 1.46%, overnight. The NiftySmallcap50 rose by 68 points, or 0.82%, to 8,462 today.

Among the sector losses, Nifty Media declined 10 points, or -0.59%, to close at 1,672, while Nifty IT fell -495 points, or -1.30%, to close at 37,478.

In the international markets, the Dow Jones futures were down -302 points, or -0.7%, on Monday (4:20 pm IST) due to Moody's downgrading the country's credit rating from AAA to AA1. Asian indices, such as the Nikkei 225, KOSPI, Taiwan, Malaysia Hang Seng, and Straits Times, also ended the day lower because of China's slowing retail sales growth, which suggests that the world's second-largest economy is still worried about consumption.

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