As street knows Modi 2.0 is more powerful than PM Modi’s 1st inning, is soon going to shift focus to the govt’s reforms agenda. The strong mandate is likely to help the govt execute reforms smoothly. Bharatiya Janata Party (BJP) has declared its manifesto in the name of Sankalp Patra for Loksabha Elections. BJP has made 75 promises for 75 years of India’s independence in the resolution letter for Lok Sabha elections. We find some of stocks which can perform well with govt’s top line priorities with this term.
CMP 580 (52 Week High 943 /52 Week Low 541)
Modi govt’s goal of doubling the income of farmers by 2022and to create market opportunity to reach minimum support price (MSP) through e-name, village and Prime Minister Asha Scheme this will encourage farmers to adopt modern farming techniques and Escort will be the biggest beneficiary in that case. Stock declined 40% from highs this makes investment in Escorts more attractive.
CMP 423 (52 Week High 526 /52 Week Low 342)
Pension scheme for small and marginal farmers to ensure social security after the age of 60 years. Short-term agricultural loan up to 1 lakh rupees for 1 to 5 years on zero percent interest rate on the condition of payment of principal repayment. M&M Finance in one of India’s NBFC focused on rural as well as semi urban are and holds largest Indian tractor financier.
CMP 1080 (52 Week High 1322 /52 Week Low 937)
Govt will work towards completing all irrigation projects under Prime Minister’s Agriculture Irrigation Scheme and increase the irrigated area of the crop. Under Swach Bharat Abhiyan govt wants to build toilets in each house and govt is giving subsidy for that. Govt wants to availabile clean drinking water for all households. The Indian pipes sector, which is around 70 percent of the plastic product industry, is structurally set to benefit from the government’s rising thrust on irrigation programs and housing & infra expenditure. While Supreme is the most diversified, with operations in plastic pipes (agri, non-agri), furniture, industrials and packaging and establishing a strong foothold in CPVC pipes.
Apex Frozen Food
CMP 271 (52 Week High 534 /52 Week Low 238)
Govt will provide assistance to more fishermen by ensuring availability of storage capacity and other infrastructure under new Fisheries Estate Scheme. Apex Frozen Food is prominent name in the aquaculture fell more than 50% in last one year and now stock became more reasonable. India’s shrimp exports continue to gain momentum and that could benefit Apex Frozen Food. The US continued to be the preferred destination as two-fifths of all exports went to Washington, compared to barely above one-third of the total export and China also contributed to the rise in shrimp export from India. Its share in the export catapulted to 17 percent, compared to 3 percent last year and this creates huge opportunity for Apex frozen food.
CMP 609 (52 Week High 649 /52 Week Low 310)
Pradhan Mantri Awas Yojana is an initiative by Government of India in which affordable housing will be provided to the urban poor with a target of building 20 million affordable houses by 31 March 2022. Under Swatch Bharat Abhiyan Govt wantToilets in each house but yet nearly 40% of people don’t use toilets this creates opportunity for ceramic industry leader Kajaria. Kajaria’s new business segments (sanitaryware, faucets and plywood) continue to scale up at a healthy pace.The recent National Green Tribunal (NGT) order on shutdown of all ceramic units in Morbi and Wankaner that run on coal gasifier will force tile manufacturers to shift to gas for power and fuel requirements in order to comply with industry regulations, this will create a level-playing field for branded players like Kajaria and pave the way for some consolidation in the sector.
CMP 1517 (52 Week High 1607 /52 Week Low 1182)
Govt is focused on completion of the first phase of Bharatmala project and doubling the length of national highways. Govt’s prime area of focus is Infrastructure so L&T will huge scope of work in coming time. With the BJP coming to power, development-related projects could see a push of up to 40% as the needed financial strength for faster execution is perceived to be there. Its strong balance sheet coupled with a large order book of more than 3 lac crore makes it conducive to an aggressive stroke-play towards efficiently executing complex and large projects.
VA Tech Wabag
CMP 320 (52 Week High 433 /52 Week Low 244)
Govt wants to recycling of waste water and 100% management of liquid waste. Construction of water management works together, creating a new ministry of water.This will help in tackling the overall management of water management and ensuring better coordination of efforts. Govt’s one of the key focus are is to clean Ganga till 2022 As a result, VA Tech Wabag may see good order inflow for the Ganga cleaning project. When the BJP government came to power at the Centre in 2014, Namami Gange was its flagship project and company engaged in water treatment, were expected to be key beneficiaries. Now, VA Tech may see up to a five-times increase in its order book
State Bank of India
CMP 346 (52 Week High 364 /52 Week Low 247)
Govt kept target of bank account for each citizen and banking services are available to each person within five kilometres. According to the latest data, there were 34.14 crore account holders under the PMJDY. Over 59 per cent accounts are in rural and semi-urban areas and SBI is biggest player in rural and semi urban area so SBI is major beneficiary of this financial revolution. PSU banks are likely to see a turnaround in profitability given that most of the pain has been recognized and NPA and credit costs are peaking out, which will lead to an improvement in return ratios. PSU Banks are trading at a P/B of 1.0x, in line with the historical average of 0.9x. An earnings bounce-back is anticipated FY20 onwards, which should further support stock performances. SBI is among our top pick in PSU banking sector.
Indian Oil Corporation
CMP 160 (52 Week High 177 /52 Week Low 105)
Govt aims to LPG gas connections for more and more poor rural households and LPG supply from pipes in major cities and small towns. Govt doing all attempts to achieve the goal of mixing 10% ethanol in petrol which is major beneficial for oil marketing companies. To reduce air pollution, work towards the complete shutdown of crop waste in rural area and garbage management in urban area and IOC will be biggest beneficiaries out of it as in recent times, there has been a marked shift from use of conventional fossil fuels to new and renewable sources of energy that are cleaner, safer and inexhaustible. State-run fuel retails have begun the process of their maiden purchase of biodiesel for blending it with diesel. Indian Oil Corporation have invited tenders for procurement of 850 million litres of biodiesel from local manufacturers and invited tenders for production of compressed bio gas this will game changing move for IOC as their will be huge improvement in margins.
CMP 141 (52 Week High 156 /52 Week Low 60)
Govt’s goal of increasing the operational airports to 150 for better air connectivity. Govt of India launched Udan Scheme with the objective of letting the common citizen of the country fly, aimed at making air travel affordable and widespread, to boost inclusive national economic development, job growth and air transport infrastructure development of all regions and states of India. For which the initial funding of ₹45,000 million for the enhancement of 50 regional airports was approved in May 2017. Low cost carrier SpiceJet reported a 22 percent year-on-year growth in profit in quarter ended March 2019 aided by Jet Airways fiasco. With a massive fleet expansion this fiscal, a favourable operating environment, the company added 25 aircraft in April & May 2019; aircraft fleet stands at 100 as on May 28, 2019. It operates 584 average daily flights, significant improvements in yields and prime slots at key airports, company is confident of a strong performance for FY2020. Brent Crude declined to $61/bbl may positive for low cost carrier spicejet.
CMP 186 (52 Week High 399 /52 Week Low 143)
Govt aims connecting every village panchayat to high speed optical fiber network and Wi-Fi facility on all major railway stations. A smart city is an urban area that uses different types of electronic Internet of things (IoT) sensors to collect data and then use these data to manage assets and resources efficiently. This includes data collected from citizens, devices, and assets that is processed and analyzed to monitor and manage traffic and transportation systems, power plants, water supply networks, waste management, crime detection, information systems, schools, libraries, hospitals, and other community services. Sterlite Technologies, a global technology leader in smarter digital infrastructure deployed various Smart City Services in India for Government. Sterlite Tech led the end-to end design, development and management of smart city to be the Wi-Fi Capital City with citizen centric smart city services. Twin Star Overseas, promoters of the company, has removed 100% of the pledge on Sterlite’s shares with immediate effect. Revenue recorded remarkable growth of 111.56% YoY and 34% QoQ driven by early execution of the navy order.
Rail Vikas Nigam Ltd
CMP 25.9 (52 Week High 29.90 /52 Week Low 18.65)
Modernisation of Railways is topmost priority Modi govt. Govt wants to change in broad gauge of all viable rail tracks by 2022, Every effort to electrify all the railway tracks by 2022. Construction of smart railway stations across the country and Direct Freight Corridor project will get completed. 13 cities where metro rail is under construction and is likely to be completed by coming year. RVNL is our top pic in railway sector, RVNL is a project executing agency working for and on behalf of the Ministry of Railways. The company executes all types of railway projects including new lines, doubling, gauge conversion, railway electrification, metro projects, major bridges, construction of cable stayed bridges, institution buildings, etc. The company’s project scope involves full cycle of project development i.e. from conceptualisation to commissioning including design, preparation of estimates, calling and awarding contracts, project & contract management etc, RVNL has an order book of nearly 80,000 crore.
HDFC Standard Life
CMP 452 (52 Week High 510 /52 Week Low 344)
Govt wants to ensure insurance, pension with all the unorganized workers for comprehensive social security coverage. MODI govt is very serious about insurance as they have started schemes like Ayushman Bharat, Pradhanmantri Bima Yojna. India has a high protection deficit among key Asian countries at 92 percent, according to 2014 estimates by Swiss Re. This implies that for every $100 required for protection, only $8 is spent by a typical Indian household, leaving a massive mortality protection gap this represents a huge opportunity in insurance sector. HDFC Standard Life is market leader in life insurance business. ROE is much better than other market participants. HDFC Life delivered a stable performance reported a 24 percent YoY growth in total premium as new business premium grew 32 percent.
CMP 227 (52 Week High 335 /52 Week Low 185)
Government of India, Ministry of Tourism launched the Swadesh Darshan Scheme (Central Sector Scheme)– for integrated development of theme based tourist circuits in the country. Develop circuits having tourist potential in a planned and prioritized manner; Enhancing the tourist attractiveness in a sustainable manner by developing world class infrastructure in the circuit. Development of tourist facilitation services to enhance visitor experience and it will attract tourist from all over globe. Government of India has launched the PRASAD(Pilgrimage Rejuvenation and Spiritual Augmentation Drive) scheme to identify and develop pilgrimage tourist destinations on the principles of high tourist visits, competitiveness and sustainability to enrich the religious tourism experience.Mahindra Holidays is our top pick in tourism sector, added new destinations has increased resort count to 61. Improved customer experience has helped to achieve healthy occupancy of 82.9% at mahindra holiday’s resorts.