Tata Consumer Products Ltd. & ITC - Two most adorable bets for stock investors currently

 

Note: Above logos have been used for reader's easy identification and knowledge purpose. I have no relation whatsoever with any of the above brands or companies. 

The Sensex deflated to its 52 week lowest at 25638.90 points on 24 March 2020. It tanked  about 37% from above 41000 levels in just a month's time frame; thanks to the Covid19 pandemic and the subsequent lockdown declared by Indian govt. Nevertheless after every dusk, there is a dawn and we are already back and far higher than the previous levels to currently trade around 46000 levels. Recently all investors have witnessed a significant surge in most of the stock prices are now almost all good options are running on or around all time high price levels. So in which stocks to invest and that too with trivial risk?

If you have observed closely, we have witnessed many sectorial wise surges in the stock prices in past many weeks; may it be pharma, banking, auto sector or IT. This makes layman investors very uncertain or difficult to judge as in to which equities should they invest their hard earned money and which stocks might give them remarkable returns with an assurance of being the least risky?

Under such circumstances my current bets would be ITC (CMP 216) & Tata Consumer Prods (CMP 576). Both these options are feasible currently as their recent price recoveries have proved that they are back in the business. Though Tata Consumer Prods is just about to retouch its highest ever levels of 591, it still should be considered as a good investment while ITC undoubtedly has a long way to go. 

Why ITC?

ITC is an underdog. Highly undervalued but a reliable option. It has pulled itself together fairly well and has recovered by 33% in just 6 weeks. However the more important factor is that now the company's management has got aggressive in all terms to get the company the right valuation it deserves. It has got a wide product portfolio, reasonable market cap, low debt and an excellent cash flow and last but not the least - has been an excellent dividend yielding company. For those who don't know, ITC deals in multiple segments as stated below:-

• FMCG (Sunfeast, Aashrivaad, Bingo, Vivel, Fiama, Engage, Savlon, Yipee and many more)
• Hospitality (WelcomHotels, Fortune & exclusive franchisee in India for Sheraton)
• Tobacco products (Classic, Gold Flake, Navy Cut, Players, Bristol, etc.)
• Education (Classmate & PaperKraft)
• Information Technology (ITC Infotech)
• Paper & Packaging 
• Lifestyle (Wills)
• Agri Businesses 

With daily life returning back to normal with diminishing effects of Covid19 pandemic and with the company going aggressive on its marketing strategies as well as corporate growth, one can invest in ITC without any doubts with a target of 280-300 for a period of 1 to 1.5 years. ITC has had an all time high of 342 and the last dividend declared in July 2020 was 1015%. 

Key factors that will drive this stock price upwards are as below :-

• Improved management focus
• Tobacco & Hotel business will be back to normal very soon
• Rising demands of essential FMCG products 
• Agri Businesses (Modi govt's rural strategy is fueling agri business big time)

Target : 250 Period - 2 to 3 months. However I always advise to stay invested for a long term for fantastic profits.

Why Tata Consumer Products?

With a whooping market cap of more than 53000 Crore INR, this company has been pretty aggressive in its business strategies. A double digit sales growth in most of its product categories, horizontal and vertical production line extensions and great joint ventures or acquisitions under pipeline; what else do you want in a stock? Most of its essential category products have done adequate levels of business post the lockdown era. Further as the Tatas are planning for an acquisition in Big Basket, eyeing a deal with CCD and constantly innovating their product lines, it gives an infinite positive signals in to the investor's mind space. 

Following aspects make me suggest this stock on CMP :-

• upcoming deals with Big Basket & CCD
• Rising Cash Flow
• Improved Book Value
• Rising interest of FIIs
• Solid growing business performance for back to back qtrs

My recent predictions on Tata Consumer Prods

Target : 680 Period - 2 Qtrs. However I always advise to stay invested for a long term for fantastic profits.

PS: Tata Consumer might look less attractive than ITC in the medium short term but however in the long term, both look equally attractive and trustworthy.

Happy investing folks 😉

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Disclaimer: Above are just judgmental recommendations. The risk of investment lies on you. I will have nothing to do with your profits or losses. Invest at your own risk!