8 stocks that could perform exceedingly well under Modi 2.0

Modi 2.0

Rallies are over but rallies have just started.

Uh! Confusing?

We meant, election rallies are over, but after the landslide victory of the NDA in the Lok Sabha Elections 2019, the market rallies might have just started.

This isn’t a prediction about the Sensex or Nifty.

As you would know, only a handful of stocks have been driving these indices up and the performance of a whole host of other companies has been lacklustre.

This scenario is likely to change drastically in the Modi 2.0 era.

Wondering why? (and perhaps how?)

A massive mandate has ensured that there won’t be flip-flops on the macro-economic policy front. In fact, the government will be able to focus more vigorously on its unfinished agenda. Furthermore, the work done so far might also start bearing fruits, sooner or later.

Themes that might play out in Modi 2.0 phase are:

  • Infrastructure
  • Water transmission
  • Healthcare
  • Defence

Infrastructure

Modi 2.0

Modi 1.0 made massive budgetary allocations to the infrastructure sector, especially to railways. In 2016, it decided to end the 92-year old practice of presenting the railway budget separately. This helped facilitate multimodal transport planning between highways, railways and inland waterways, besides allowing the government more elbow-room for better allocation of resources.

Besides, Modi 2.0 aims to double the length of national highways by 2022, complete phase-1 of Bharatmala project and launch phase-2.

Modi 2.0 will be dedicated to taking the effort of Modi 1.0 administration towards infrastructure development to the next level.

It endeavours to:

  • Convert all viable railway tracks to broad gauge by 2022
  • Attain electrification of all railway tracks by 2022
  • Enhance the connectivity through high-speed trains such as Vande Bharat Express by 2022
  • Complete the dedicated freight corridor projects, modernize of railway stations by 2022
  • Introduce new technologies and designs in road construction, operation and maintenance.
  • Construct 60,000 km of National Highways in the next five years
  • Add at least 100 airports in the next 5 years
  • Double the port capacity in the next five years

Some excerpts from BJP’s election manifesto:

The physical infrastructure of the country has undergone an unprecedented upgrade in the last five years. We have connected 91% of villages with rural roads, electrified 100% of villages, operationalized 36 new airports and introduced metro networks in several cities. Looking ahead, we plan to build 60,000 km of National Highways, connect 100% of villages with rural roads, operationalize 100 new airports, modernize 400 railway stations, and cover 50 cities with metro networks.

We have made all efforts to make the experience of rail journey safe, smooth, clean and satisfying and have achieved great results. We will continue the pace of work in this regard and encourage private participation in the development of railway amenities and infrastructure and provision of services.

Water transmission

Modi 2.0

Nearly 16.3 crore people in India don’t have access to clean water.  About 2 lakh Indians die every year because of the inaccessibility of fresh water. Modi 1.0 built 9 crore toilets; yet, many people lack access to improved sanitation facilities. Modi 2.0 is expected to strive to change this situation.

Modi 2.0 is expected to launch the JalJivan Mission to provide access to clean water to every household by 2024. The Modi 2.0 administration will also aim to achieve 100% disposal of liquid waste and ensure the reuse of wastewater. The government will aim to construct new water grids to deliver on its promise of access to clean drinking water for all.

Some excerpts from BJP’s election manifesto:

Water is a critical resource but its management is spread across various departments, even at the Central level. We will form a new Ministry of Water unifying the water management functions to approach the issue of water management holistically and ensure beer coordination of efforts. The Ministry will take forward the ambitious programme, conceptualized by Shri Atal Bihari Vajpayee, for linking rivers from different parts of the country and ensure a solution to the problems of drinking water and irrigation. We will initiate work on this programme by constituting an authority. We will ensure the sustainability of water supply through a special focus on the conservation of rural waterbodies and groundwater recharge.

Healthcare

Modi 2.0

Modi 1.0 took various initiatives to improve public health which includes programmes, such as Ayushman Bharat and The Mission Indradhanush, to name a few. Modi 2.0 might ensure effective implementation of these schemes. BJP’s election manifesto reiterated the party’s commitment to improving public health by adding more infrastructure, providing a comprehensive insurance cover to nearly 50 crore Indians and doubling the number of MBBS doctors and specialists.

Some excerpts from BJP’s election manifesto…

While providing annual health cover of Rs. 5 lakh to 10.74 crore poor families under the Pradhan Mantri Jan Arogya Yojana under Ayushman Bharat, we also initiated a programme to set up 1,50,000 Health and Wellness Centres (HWCs) by 2022.

In addition, we have conceived and implemented programmes for controlling the prices of medicines, and significantly expanding Medical education. We are committed to leverage all resources to ensure that the out-of-pocket expenditure on health is reduced and all citizens can avail necessary medical services.

Defence

Modi 2.0

During Modi 1.0, the government tried to boost indigenous production of defence equipment. In the Modi 2.0 phase, the government may continue its manoeuvre to modernise India’s defence forces, encourage investments and thereby, generate employment opportunities in the defence sector.

Some excerpts from BJP’s election manifesto:

In order to achieve our long-term goals, we must first secure our country against internal and external aggression. These threats need to be dealt with at their roots and our decisive leadership that will equip our security apparatus with all the necessary tools. As we have already demonstrated, we intend to use our foreign policy, were necessary, in order to tackle the problem of global terrorism. Thus, we intend to increase the strength of our diplomatic and allied cadres.

We are committed to focus on ‘Make in India in Defence’ to enable indigenous production of defence equipment. This will also generate employment and encourage investment in the defence sector.

We have handpicked 8 stocks that might benefit from the unfolding of the BJP’s Manifesto as the government starts delivering on its electoral promises.

8 stocks to buy for Modi 2.0 era
Average revenue and average PAT figures are the averages of the last 5 quarters
*average of 3 quarters
^FY 18 numbers were considered
Data source: ACE Equity

The government’s performance on 4 themes discussed herein will primarily decide how far the Modi government will go in fulfilling its electoral promises. And more importantly, it will offer cues on how likely India is to become a USD 5 trillion economy by 2025, as envisaged.

If Modi 1.0 was about dreaming big. Modi 2.0 has to be delivering big.

Market trends may follow…

 

Also Read: 15 stocks to buy in this volatile market 

Disclaimer:

We, Ventura Securities Ltd, (SEBI Registration Number INH000001634) its Analysts & Associates with regard to blog article hereby solemnly declare & disclose that:

We do not have any financial interest of any nature in the company.

We do not individually or collectively hold 1% or more of the securities of the company.

We do not have any other material conflict of interest in the company.

We do not act as a market maker in securities of the company.

We do not have any directorships or other material relationships with the company.

We do not have any personal interests in the securities of the company.

We do not have any past significant relationships with the company such as Investment Banking or other advisory assignments or intermediary relationships.

We are not responsible for the risk associated with the investment/disinvestment decision made on the basis of this blog article.

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