As Indian equities look to extend their bull run in the new Hindu calendar year that began Thursday, analysts expect gains in stocks that will benefit from the economic recovery in Asia’s third-biggest economy as well as the ongoing regulatory crackdown on neighboring China.
The festival of Diwali, celebrated in India and many parts of Asia, is considered auspicious for purchases of everything from automobiles to apartments and even stocks. Indian brokerages, which traditionally release picks for the new year in this seasons, are bullish this time on mid-sized names that are focused on reopening of business and travel activity in India.
Here are some of analysts’ top picks for the festival season:
Edelweiss Wealth Research
- Indo Count Industries Ltd.
- The fabrics company exports 12% of all bed sheets imported by the U.S. and has benefited from increased retail demand, fueled by more people working from home
- Disruption in China’s Xinjiang region, which accounts for 20% of the world’s cotton production, is a big opportunity for India’s textile exporters
- Inox Leisure Ltd.
- India’s second-largest movie screen operator benefits from an oligopoly in the business
- The company is well-placed to capitalize on strong pent-up demand
- The Hindi language cop drama “Sooryavanshi” collected 500 million rupees ($6.7 million) in two days since its release on November 5
- KNR Constructions Ltd.
- The has healthy revenue visibility over the medium term as about half of its orders come from irrigation projects
- The company also owns construction equipment worth 12 billion rupees, which allows it to bid competitively for projects
- EID Parry India Ltd.
- The Murugappa Group unit is one of the largest sugar companies in India
- The global sugar deficit strengthens the outlook for India’s sweetener producers, while EID Parry also benefits from its focus on expanding retail products such as Sweet Care
- Tatva Chintan Pharma Chem Ltd.
- The company is India’s sole distributor of chemicals used in zeolite crystals for the manufacturing of detergents, air purifiers and dietary supplements
- China’s crackdown on the chemical industry and the Indian government’s push to expand via production-linked incentive plans are favorable for the company
- ABB India Ltd.
- The company is setting up an ecosystem of charging stations for electric vehicles in India, which is estimated to be a $3 billion per year opportunity
- Some of India’s state governments have announced dedicated policies to support EV adoption and initiated tendering for charging stations
- Kalpataru Power Transmission Ltd.
- The company is seen as a key beneficiary of power transmission capex in India as well as global markets including the U.S., where the Biden administration’s $550 billion infrastructure spending will involve power grid upgrades and new transmission lines for renewable energy
- Kalpataru Power intends to monetize its four transmission line projects in India and make its balance sheet healthier
- Ramkrishna Forgings Ltd.
- The company is a major supplier of forged products for medium and heavy commercial vehicles, which are expected to witness a strong rebound in fiscal years 2022 and 2023 after sharp volume declines in the preceding two years
- It also plans to diversify into passenger, light commercial vehicles and non-auto engineering segments
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