Last Updated: Wednesday, March 9, 2016

Invest in these sectors for excellent return

Budget Impact: These Stocks will be winners

Image:moneynbusiness.com_Budget Impact: These Stocks will be winners

The government is committed on housing, road and development of rural economy and this will surely boost the fortunes of companies involved in operation of these sectors. Here is the list of some sectors to be focused for excellent investment in the year 2016-17.

Housing Finance: 

With provision of additional deduction of Rs. 50,000 on housing loan in this budget, this sector is expected to grow faster. RBI rate cut will be added advantage for Housing Finance companies. In this regard most of the brokers including Motilal Oswal Securities maintained its Buy rating on LIC Housing Finance (LICHF) which is trading at 14.3 PEx and PBV of 2.9. LIC housing finance is also known for its excellent Div yield % of 1.11. At current price of Rs. 452 it looks promising. Other stocks in this sector to be focused;
  • Gruh Finance:  CMP Rs. 234, trading at 37.1 PEx with 12.5 PBV. Gruh Finance has given return of -8.06% over last 1 year.
  • Repco Home Finance
  • Canfin Homes


Infrastructural development of a nation is incomplete with well maintained Roadways, this is the reason government of India focusing more and more on Road Sector. Some of the major initiative in this sector include construction of 10,000 km of roads over the next year along with up gradation of 50,000 km of state highway into National highway. All this will require more than 1 lakh crore of investment. So there is huge investment possibility in road sector. Some of the stocks in this sector may be focused;

  • KNR Constructions: CMP Rs. 502, trading at 11.1 PEx with 2.5 PBV. KNR Construction has given return of 15.35% over last 1 year.
  • IRB Infrastructure: CMP Rs. 225, trading at 12.7 PEx with 3.7 PBV. IRB Infrastructure has given return of -11.40% over last 1 year.
  • IL&FS Transportaion Networks
  • Sadbhav Engineering


This Sector has always been darling of investors. FMCG (Fast Moving Consumer Goods) sector depends highly on agricultural product and rural spendings, a sharp focus has been seen on both agriculture and rural spends this budget. Highest ever allocation in MNREGA,  cheaper interest rate, better irrigation facilities etc. will boost up income of farmers. Increased income will lead boosting rural consumption. For past couple of years FMCG companies witnessed a low-volume growth due to poor monsoon, low rural income, lack of government support etc.Hope this monsoon will bring plenty of opportunities for FMCG sector. Stocks to be focused in this sector are;

  • Marico: CMP Rs.237, PEx- 43.9 PBV 13.1 .Marico has given return of 23.73% over last 1 year.
  • Dabur India: CMP Rs.244 , trading at 35.6  PEx with 18.3 PBV. Dabur has given return of -7.78% over last 1 year.
  • Hindustan Unilever
  • ITC


As seen above increased disposable income in rural sector due to MNREGA, RBI rate cur, Monsoon, pay hike in 7th Pay commission etc. overall rural demand is expected to grow fast. Brokers like IIFL, Angel broking, Motilal Oswal are bullish on 'Automobile' companies having exposure in rural market;

  • Escorts
  • Mahindra and Mahindra
  • TVS Motors

Fertiliser & Irrigation: 

Over 28.5 lakhs hectares of land is going to be covered by irrigation under Pradhanmantri Krishi sinchai yojna (PMKSY). Government in this budget announced a proposed investment of Rs. 86,500 Cr, in this sector over next five years. Stock to be focused under Fertiliser and Irrigation sector are;
  • Kaveri Seeds
  • Monsanto India
  • Jain Irrigation system: Jain irrigation system is one of the beneficiaries of govt's drip irrigation project, the shares of Jain Irrigation are trading somewhere Rs. 56. At a PEx of 26.6.

Cement: Government Smart India initiative will bring lots of opportunity in manufacturing and construction work companies, Brokers do believe that Cement sectors will be key beneficiary of this initiative. Most of the brokers and credit rating agencies are bullish on;

  • UltraTech Cement: CMP Rs.2974 , trading at 36.7  PEx with 4.3 PBV. UltraTech cement has given return of -9.84% over last 1 year.
  • Prism  Cement 


Motilal Oswal Securities is positive on Indigo being India's lowest cost carrier and being a market leader ahead of its competitors. It believes even if government hiked excise duty on aviation turbine fuel (ATF), this will not dent aviation companies margin.

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