Best stocks to trade today, 21 May, as recommended by Trade Brains Portal

The Sensex opened at 82,116.17, slightly higher than its previous close of 82,059.42, but tumbled as much as 906 points (1.10%) during the session to hit an intraday low of 81,153.70. Meanwhile, the Nifty 50 began at 24,996.20, up from its prior close of 24,945.45, before sliding 1.10% to an intraday low of 24,669.70.

By the close, the Sensex had dropped 873 points, or 1.06%, to 81,186.44, while the Nifty 50 ended 262 points lower, down 1.05%, at 24,683.90.

The selloff was broad-based, with the BSE Midcap and Smallcap indices falling 1.65% and 0.96%, respectively.

Today, we recommend two stocks, one from the FMCG sector and the other from the consumer durable sector. We also analyse the market's performance on Tuesday to understand what lies ahead for the stock indices in the coming days.

Dabur India Ltd

• Current price: ₹ 476
• Target price: ₹ 565 in 12 months
• Stop-loss: ₹ 431
• Why it’s recommended: In India, FMCG is the fourth largest sector contributing 3% to GDP and providing jobs to nearly 3 million people with the market size being valued at $245.39 billion in 2024. This is expected to grow 15-17% by revenue in FY25, driven by rising disposable incomes, rural penetration, and e-commerce expansion. Total revenue of FMCG market is expected to grow at a CAGR of 27.9% through 2021-27, reaching nearly $ 615.87 billion.

Dabur India is among the top four FMCG companies in India. It caters to the following business segments - healthcare, personal care, and food products.

Over the years, the company has been focusing on manufacturing and selling ayurvedic products. Their portfolio includes Dabur Amla, Dabur Red Paste, Dabur Chyawanprash, Dabur Honey, Dabur Honitus, Dabur PudinHara, Dabur Lal Tail, and Dabur Real. 

The company has manufacturing facilities in 22 locations with 14 in India, and one each in the UAE, Sri Lanka, South Africa, Nepal, Egypt, Bangladesh, Turkey, and Nigeria, offering products in over 100 countries across the globe, contributing 26% of its business from International regions. Dabur offers over 400 products across 21 categories and over 1,000 Stock Keeping Units (SKUs). Dabur India has built a strong distribution network of 8.5 million retail outlets across India.

For FY25, the company has reported revenue from operations of ₹12,563 crore, up by 1.3% from ₹12,404 crore for the same period. Revenue from International business is ₹3,281 crore, a growth of 7.7%. Dabur acquired 51% Compulsory Redeemable Preference Shares in Sesa Care Private Ltd (Sesa) at a cash consideration of ₹12.6 crore. Sesa holds the number three position in the ayurvedic hair oil category. It is expected to help the company expand its foothold in the ayurvedic oil business in the medium term.

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Verticals contributing to Dabur's domestic business - 49.7% from Home & Personal care, grew by 0.5% YoY, 31.3% from healthcare, up by 2.2% YoY, 2% from food, increased by 18.4% YoY, and beverages contributing over 17%, increased by 8.8% YoY.

• Risk Factor: The company remains exposed to intense competition in the ayurvedic and herbal segment with multiple established players, including some large multinational players, as well as domestic companies. There is a risk of growth slowdown due to a challenging macroeconomic environment. Also remains exposed to agro-climatic risk, which could result in variations in crop output/prices as Dabur has a healthy dependence on agri commodities.

Whirlpool Of India Ltd

• Current price: ₹ 1,300
• Target price: ₹ 1,490 in 12months
• Stop-loss: ₹ 1,205
• Why it’s recommended: Whirlpool recorded a growth rate of 16% in its consolidated total income, which stood at ₹8,110.16 crore in FY25 as against ₹6,993.59 crore in FY24. Net profit jumped 62% from ₹224.3 crore in FY24 to ₹362.78 crore in FY25. The board of directors recommended a final dividend of ₹5 per share.

Whirlpool is constantly focusing on brand campaigns. It collaborated with HUL in Q2 for a joint marketing campaign of HUL’s Surf Excel and Whirlpool’s washing machine, aiming to improve their penetration in the market. The company is also focused on new product launches in its refrigerators and washing machine segments to cater to the ever-changing customer preferences.

Whirlpool generates around 30% of its revenue from the June quarter owing to the seasonal support during summer. It is also investing funds in the front-end capability and capacity, including customer services and sales, and is constantly working towards greater execution, driving its premiumization goals, including stronger visibility of premium lines and new ranges. Whirlpool is also focused on better pricing strategy, especially in their premium lines, and continues to leverage greater customer relationships.

Furthermore, as per the IBEF report, the washing appliance industry is anticipated to grow at a CAGR of 7.65% to reach $5.43 billion by 2029, and the refrigerator market is expected to grow at a CAGR of 9.37% to reach $12.1 billion by 2033. The dishwasher market is expected to cross $90 million by 2025-26, supported by increasing demand from metropolitan cities like Mumbai, Bengaluru, Delhi, and Hyderabad. 

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Key growth drivers are increasing share of fully automatic washing machines, inverted ACs, and larger refrigerators due to premiumization and prioritization of aesthetics beyond just functional machines. Penetration of smart appliances is estimated to reach 10% by 2028 from 4% in 2023. Other key factors, such as the availability of credit for consumer financing and omnichannel availability, may act as a tailwind for the sector. Currently, India’s penetration of ACs & refrigerators is 10% and 35%, respectively, way lower than the world average. Further, AC penetration in India is projected to reach 40% by 2050.

• Risk Factors: A significant part of the rural and semi-urban population is facing issues with affordable consumer goods due to increased premiumization. Thus, to improve penetration in India, more affordable-priced consumer durables should be marketed. Additionally, the country faces higher costs of logistics due to inefficiencies, which could lead to increased prices borne by end consumers. Furthermore, changes in e-waste regulations could impact Whirlpool’s margins negatively, affecting its growth in profitability.

Stock market recap 20 May

The Indian market opened flat on Tuesday but quickly slipped into the red, with the Nifty 50 starting below the 25,000 mark at 24,996 and the BSE Sensex opening at 82,116. 

Broader indices declined further throughout the day, with the Nifty hitting an intraday low of 24,669.70 before closing at 24,683.90, a drop of 261.55 points or 1.05%. The Nifty’s RSI stood at 57.97, below the overbought threshold of 70, and the index remained above its 20, 50, 100, and 200-day EMAs. 

The Sensex followed a similar trend, hitting an intraday low of 81,154 and closing at 81,186.44, down 872.98 points or 1.06%, with an RSI of 56.91, also trading above all four EMAs.

All sectoral indices ended in the red, led by Nifty Auto, which dropped 521.4 points (2.17%) to 23,531 amid profit booking after a four-day rally. Nifty Next 50 declined 1.84% (1,240 points) to 66,165.50, and Nifty Midcap 50 fell 1.54% (246 points) to 15,797.60. Nifty IT and Metals outperformed the broader market, posting smaller losses of approximately 0.52% and 0.59%, respectively.

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Market sentiment was dampened by Moody’s downgrade of the US credit rating, foreign institutional investor (FII) outflows, and sector-specific profit booking in areas such as Auto and Defense. Additionally, rising COVID-19 cases in parts of Asia, including Hong Kong, Singapore, and Thailand, added to investor caution.

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