New Delhi: According to it’s latest India Strategy Report – Mandate 2024, Brace of Volatility, Prabhudas Lilladher (PL), one of the most trusted financial services organisations in India, stated that irrespective of the regime that comes at the centre, sectors such as FMCG, Auto, Healthcare, IT Services, Private Banks and Capital Goods are expected to perform well and cited as prudent defensive hedge against election results.
PL expects continuation of policy if NDA comes back to power and themes around Infra, Defence, CG, New energy, Tourism etc, will continue to do well. Consumer, 2W and Tractors can get a boost from green shoots in rural demand and expectations of normal monsoons. Unexpectedly if INDIA alliance comes to power, it will lead to de-rating in markets and specific sectors like defence, capital goods, tourism, PSU’s (including Banks), drones, AMC, wires and cables, plastic pipes and EMS. PL believes sectors like FMCG, retail, 2W, PV (entry level), tractors, real estate, logistics (Ecom centric) and consumer durables will benefit from expected policies. Markets have been nervous from the past couple of weeks on account of an unexpected repeat of UPA victory in 2004 that resulted in 15% decline in Sensex in a single day.
Prabhudas Lilladhar in its report has also provided a list of sectors and stocks which will do well irrespective of the regime in power.
- FMCG – Rural demand revival will get a boost if supplemented by freebies. Key stocks – HUL, Dabur, Emami, Marico, GCPL, Britannia, Varun Beverages
- Auto – 2- wheeler, Tractor and entry level cars will benefit. Key stocks – Hero MotoCorp, Maruti and M&M.
- Healthcare – Perfect defensive with Sun Pharma, Cipla, Max Health and Jupiter as key stocks
- IT services – More of a global play with very limited impact. Key stocks – TCS, LTI Mind tree, HCL tech, Cyient, and Tata Tech
- Private Banks – Expect de-rating of all PSU’s including banks. Focus may shift to top rung private banks, which are already trading at a significant discount to their last 10-year P/ABV. Key stocks – HDFC Bank, Kotak Mahindra Bank, Axis Bank, ICICI Bank
- Capital Goods – While many segments in EPC, defence, new energy are at risk, PL believes global technology leaders like Siemens, ABB, Schneider, Honeywell, Elantas Beck, GE T&D, Hitachi Energy, Timken, Schaffler etc. are likely to suffer much less impact.
Hindalco, Havells India and Telecom companies like Bharti Airtel will not be impacted.
After two and a half years, Prabhudas Lilladher is “Overweight” on consumer as it increases weight behind HUL, ITC, Britannia and Titan Inds, adds Delhivery in model portfolio as a proxy to consumer demand. PL turns overweight on auto and adds Hero MotoCorp in model portfolio even as it increases weight on Maruti and M&M. PL believes Consumer and Auto (PV, 2W and Tractor) provide a good hedge as it will benefit
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