Election results will be out next week and India is going to have a new government. As indicated by various surveys most probably the new government will be BJP lead government with Narendra Modi as prime minister. BJP has a good track record in all states its ruling and in the previous rule in the center when it comes to growth. Below are some of the stocks that can do well if the Narendra Modi government performs as per expectations.
BJP has a very good track record when it comes to infrastructure development. Infact out of all highways constructed in the last 30 years, 50% of them where constructed during NDA’s government. The company which will benefit the most from increased funding for infrastructure projects is IDFC(Infrastructure development and finance cooperation). IDFC has also recently got the banking license, which will also contribute to the growth and earning for the company. I believe the stock can give up to 300% return in the next five years on account of stable government under Narendra Modi’s leadership. Technically 90 rs is a strong support level for the stock. Current Price 117
2. Mahindra and Mahindra(M&M)
Mahindra & Mahindra (MM.India), has been able to increase net income despite the stall in the economy. With the improvement in economy the company will benefit a lot. Its SUV Scorpio is the highest selling SUV in the country. Company is the leading manufacturer of tractors in India. It has recently entered in the commercial vehicles and two wheeler segment as well. The company is making entry into military vehicles segment as well. The stock can easily give you return of 50% in the next couple of years from the current levels. Current price 1097
3. ICICI Bank
Banks are the backbone of economy. If the economy is good banks will do good otherwise they will be the first to suffer. ICICI Bank , one of the country’s largest private-sector banks is the best bet in the banking sector. You can also bet on SBI, the largest bank of India. But since ICICI has low NPA’s I prefer to go with it. If India’s economy continues to grow above 5%, then you can easily get 20-30% annualized returns from ICICI Bank. 2000 looks like an easily achievable target in the next couple of year. Current price 1384
To improve the economy it is necessary to increase the exports. Exports take place mainly through ports. India is creating a dedicated freight corridor that tackles the country’s dilapidated infrastructure. Shipping and logistics firm Gujarat Pipavav Port is the best in the sector to invest. Currently the stock is trading at 90 levels and it has the potential to multiply in the coming years. Current price 100
5. Shriram Transport Finance (SRTR India)
Transportation is the vital part of any economy. In India most of the goods transportation takes place through trucks. Shriram Transport Finance is the country’s biggest commercial vehicle lender, trades at a discount and has a stronger balance sheet than many of its peers. This company will gain a lot from economic growth. The stock can appreciate 50% in the next couple of years. Current price 768
6. TVS Motors
Two wheeler segment is a consistently growing sector in the country. The safe and best pick would be bajaj auto in the sector but I would like go with TVS because it has recently tie up BMW for the manufacturing of high end bikes. This can re rate the stock and can turn around the whole company. Currently the stock is at 100 levels and it can easily multiply in the coming years if all goes well. Current Price 106
7. Tata Steel
Infrastructure could not be build with steel. Tata steel is the largest and low cost steel producer in the country. The stock is still very cheap and is trading at nearly one third of its all time high price. Currently at 400 levels can easily test 600-700 levels in the coming years. Current Price 420
8. UltraTech Cement
Cement is another required thing for building infrastructure. Ultra tech is the countries largest cement producing company. You can get good annualized returns of 20-30% Current Price 2070
9 Reliance Power
The stock has been an under performer since it got listed in the market. Power sector will be on focus on Modi government. Reliance power is has many ultra power plants. After the fuel supply issues gets solved this stock can move like rocket. Limited investment should be made in this stock as its highly volatile. Current Price 72
Disclaimer: All the above stocks are recommended on the expecation of good stable government. Performance of stocks will depend on the policies of new government. Kindly consult your financial advisory before investing. Some of the stocks discussed here have been recommended to clients.
Abhishek is an Engineer MBA in Finance and Certified Research Analyst. He is an active trader and investor in the stock market since 2010. Follower of the philosophies of Warren Buffet and Peter Lynch in investing and trend following in trading.