BJP seat wins, Lok Sabha election results 2024: Stocks that analysts prefer ahead of poll outcome

BJP seat wins, Lok Sabha election results 2024: Stocks that analysts prefer ahead of poll outcome

Modi 3.0: Elara Securities sees scope for new priorities such as urban housing, urban infrastructure, maritime both commercial and defence, drones both agriculture and defence, efficiency capex in the power sector and new energy.

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PSU bank valuations have jumped to 12.2 times, which is at a 8 per cent premium to its upper Standard Deviation band and draws parallels to FY17 valuation that preceded three years of negative performance.PSU bank valuations have jumped to 12.2 times, which is at a 8 per cent premium to its upper Standard Deviation band and draws parallels to FY17 valuation that preceded three years of negative performance.
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Amit Mudgill
  • Jun 4, 2024,
  • Updated Jun 4, 2024 8:31 AM IST

Ahead of the Lok Sabha election results 2024 today, a handful of brokerages came out with their top picks from large and midcap segments, which they believe could be beneficiary of Modi 3.0, if the BJP-led NDA retains power. Healthy recent quarterly earnings, strong balance sheet and policy support should drive capex and manufacturing-led earnings growth over the medium term, they said.

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Elara Securities said the next five years of Modi 3.0 are unlikely to be identical to the previous five years. 

"While the government’s agenda is likely to be guided by the manifesto, we see scope for new priorities, such as urban housing, urban infrastructure, maritime both commercial and defence, drones both agriculture and defence, efficiency capex in the power sector, new energy, especially with a focus on green hydrogen and solar power, scaling up of nuclear power, tourism, skills development, rail freight and logistics coming into fore," said," it said. 

Nomura India likes State Bank of India, ICICI Bank Ltd, Godrej Consumer Products (GCPL), Mahindra & Mahindra Ltd (M&M), Reliance Industries Ltd, Bharti Airtel Ltd. In the midcap space  In the midcap space, it has a liking for Federal Bank, Voltas, Lupin, Medplus Health Services,  Info Edge, and Uno Minda. 

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Motilal Oswal said India is witnessing its own mini-Goldilocks moment with excellent macros -- with GDP growth at 8.2 per cent in FY24, inflation at 5 per cent and current account and fiscal deficits well within tolerance band. It cited solid corporate earnings with Nifty ending FY24 with 25 per cent earnings growth and earnings in FY25/26 likely to grow at 14-15 per cent CAGR. 

This brokerage sees focus on manufacturing, capex and infrastructure creation, and valuations at 20x one-year forward earnings. A BJP win and consequent political stability and continuity in policy-making will act like an icing on the cake and keep India as the cynosure of all eyes, it said.

This brokerage likes Coal India Ltd, ICICI Bank, Larsen & Toubro, Mahindra & Mahindra, State Bank of India, HPCL,  Adani Ports, ABB India Ltd, HPCL, and Hindalco; Midcaps: Indian Hotels, Godrej Properties, Global Health, KEI Industries, PNB Housing, Cello World, and Kirloskar Oil.

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Elara said PSU banks valuation currently has run-up to 12.2 times, which is at a 8 per cent premium to its upper Standard Deviation band and draws parallels to FY17 valuation that preceded three years of negative performance.

"Furthermore, the PSU Index currently attributes 37 per cent of price to long-term growth expectations, above historical highs of 35 per cent in FY17. The overarching bullish trend for PSU may moderate, but there remain pockets of opportunity that can drive a fresh leg-up to the rally and deliver huge returns.

L&T, NTPC, NHPC, PFC, ONGC, IGL, MAHGL, Bharti Airtel, Indus Towers and Reliance Industries are CLSA's preferred Modi stocks. "This narrow election theme based rally may end in June- July and we see banks as the best risk-reward India growth play in 2H24," it said.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

Ahead of the Lok Sabha election results 2024 today, a handful of brokerages came out with their top picks from large and midcap segments, which they believe could be beneficiary of Modi 3.0, if the BJP-led NDA retains power. Healthy recent quarterly earnings, strong balance sheet and policy support should drive capex and manufacturing-led earnings growth over the medium term, they said.

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Elara Securities said the next five years of Modi 3.0 are unlikely to be identical to the previous five years. 

"While the government’s agenda is likely to be guided by the manifesto, we see scope for new priorities, such as urban housing, urban infrastructure, maritime both commercial and defence, drones both agriculture and defence, efficiency capex in the power sector, new energy, especially with a focus on green hydrogen and solar power, scaling up of nuclear power, tourism, skills development, rail freight and logistics coming into fore," said," it said. 

Nomura India likes State Bank of India, ICICI Bank Ltd, Godrej Consumer Products (GCPL), Mahindra & Mahindra Ltd (M&M), Reliance Industries Ltd, Bharti Airtel Ltd. In the midcap space  In the midcap space, it has a liking for Federal Bank, Voltas, Lupin, Medplus Health Services,  Info Edge, and Uno Minda. 

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Motilal Oswal said India is witnessing its own mini-Goldilocks moment with excellent macros -- with GDP growth at 8.2 per cent in FY24, inflation at 5 per cent and current account and fiscal deficits well within tolerance band. It cited solid corporate earnings with Nifty ending FY24 with 25 per cent earnings growth and earnings in FY25/26 likely to grow at 14-15 per cent CAGR. 

This brokerage sees focus on manufacturing, capex and infrastructure creation, and valuations at 20x one-year forward earnings. A BJP win and consequent political stability and continuity in policy-making will act like an icing on the cake and keep India as the cynosure of all eyes, it said.

This brokerage likes Coal India Ltd, ICICI Bank, Larsen & Toubro, Mahindra & Mahindra, State Bank of India, HPCL,  Adani Ports, ABB India Ltd, HPCL, and Hindalco; Midcaps: Indian Hotels, Godrej Properties, Global Health, KEI Industries, PNB Housing, Cello World, and Kirloskar Oil.

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Elara said PSU banks valuation currently has run-up to 12.2 times, which is at a 8 per cent premium to its upper Standard Deviation band and draws parallels to FY17 valuation that preceded three years of negative performance.

"Furthermore, the PSU Index currently attributes 37 per cent of price to long-term growth expectations, above historical highs of 35 per cent in FY17. The overarching bullish trend for PSU may moderate, but there remain pockets of opportunity that can drive a fresh leg-up to the rally and deliver huge returns.

L&T, NTPC, NHPC, PFC, ONGC, IGL, MAHGL, Bharti Airtel, Indus Towers and Reliance Industries are CLSA's preferred Modi stocks. "This narrow election theme based rally may end in June- July and we see banks as the best risk-reward India growth play in 2H24," it said.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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