BJP manifesto impact: Positive outlook for automobiles, cement, metals if party gets third term, says Phillip Capital

Following the release of the BJP manifesto for the forthcoming Lok Sabha elections, analysts of Phillip Capital stated that the impact appears positive on sectors such as automobiles, cement, metals, real estate, financials, pharma, FMCG, hotels and airlines if the party comes back to power in 2024.

Analysts expect the party to be more aggressive regarding execution and policy development.

“We expect broad-based focus across sectors and segments over the next five years. Thus, we remain bullish on India’s economy and equities with a long-term perspective. We expect the country’s economy at US$ 6.7 trillion and the Nifty at 40,000 by FY30,” Phillip Capital said in its report.

Auto industry

In the auto sector, the party is aimed at developing the country as a ‘global manufacturing hub.’ This, according to Phillip Capitals, remains positive for auto suppliers like Motherson and Sona BLW. The party’s support in the transition to EV manufacturing will impact stocks such as Tata Motors and TVS Motor.

With the moto to expand the fleet of PM-eBus Seva, companies such as Ashok Leyland, Tata Motors, JBM Auto, and Olectra Greentech are expected to gain.

The party would continue to increase the MSP for major crops from time to time. This will increase the income of farmers which can be invested for modern farming and agriculture, and is positive for stocks such as Escorts Kubota and M&M, Phillip Capital report read.

Banking sector

In the banking sector, the expansion of mudra loan limit will be positive for the PSB, SFB, and MFIs. The expansion of PM Awas Yojana will be positive for HUDCO (NR).

BJP’s use of digital India infrastructure to create digital credit solution to support the growth of small traders and MSMEs would turn positive for stocks such as Shriram Finance, MasFin (NR), and Bajaj Finance, the report said.

In addition, BJP’s commitment to invest in establishing an EV charger infrastructure to foster EV adoption will be positive for Sundaram Finance (NR), Shriram Finance, and Chola.

As per the Phillip Capital report, BJP’s slum redevelopment policy and strengthening RERA will be positive for major steel players. The expansion of natural gas connections to households will be favorable for the Welspun Corp, Maharashtra Seamless, and Ratnamani Metals.

Har Ghar Nal se Jal scheme to provide clean drinking water will be positive for stocks such as DI pipes, HSAW pipes, and plastic pipe players. Likely beneficiaries, as per the report include Jindal Saw,Welspun Corp,Electrosteel Castings (NR), Hi-Tech, JTL (NR), Surya (NR), and APL Apollo Tubes.

UltraTech Cement and Ambuja Cement will be the largest beneficiaries, according to analysts.

FMCG, oil & gas sectors

With the focus on rural recovery, stocks such as Dabur, Emami and Bajaj Consumer would be major beneficiaries, while modest for HUL, Colgate, and Britannia. “Modest negative for private dairy companies - Hatsun Agro (NR), Heritage Food (NR), Dodla Dairy (NR) and Parag Milk Foods (NR). Boost in subsidy assistance to co-operatives (50- 55% of organized sector), might lead to an increase in the cost of milk procurement for private dairy company and also entry of new small cooperative could further lead to increase the competition,” the report said.

Under the oil & natural gas sector, BJP aims to get more households converted to PNG-Domestic connections. The move would have positive implications for pipe manufacturers (steel and HDPE), and there would be demand for valves, and compressors.

“The move will also have a positive bearing on consumption, and therefore, import of natural gas (LNG) in the country. This implies incremental revenue for players like GAIL, PLNG, in addition to CGD players (IGL, MAHGL, GUJGA, IRM (NR), ATGL (NR),” the report said.

Pharma sector

PM Modi’s Government would also focus on positioning the country as the ‘pharmacy of the world’ by boosting the manufacturing and research capacities of the pharmaceutical sector, especially APIs. The expansion of research-linked incentive schemes, and investment in new drugs, chemical entities, and biological entities would be positive for CDMO players like Divis, Syngene, Suven (NR) and Ami Organic (NR).

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