The current ruling political party in India has done a fantabulous come back with a majority of seats in 2019. However, the party took certain decisions which might have hampered its political presence in the rural areas.
The decisions taken by the prevailing party such as GST bills caused a major disruption among the poor people and as a result, the party’s dominance has only stuck to the middle class and HNI sectors.
In the recent election held in 2019, the BJP tally has come down to 99 seats as compared to 119 in 2019. It was due to the negligence towards the rural sector where the party performed poorly.
The party’s stronghold place called Saurashtra having 56 assembly seats, the ruling party could manage to win only 23 seats in 2019, which is far less than 36, in 2012.
The continuous negligence of rural areas has affected the party’s political presence to a much greater extent.
To cope with the situation, the Modi government has decided to invest more in the rural economy to shed its image as pro-industrialist and anti-poor.
Keeping this in mind, numerous programs have been designed to accomplish rural requirements.
In an initiative taken by the government towards rural people, the Modi government has decided to double the farm income by 2022. The government is all set to allocate Rs 1.07 Lakh Crore for the expenditure on rural development.
Of the total amount Rs 1.07 Lakh Crore, the government has already allocated Rs 48000 Crore to MNREGA for FY 2017-18.
According to the media sources, India has nearly 4 Crore households that are unelectrified and the government took a decision to provide electricity to every single village under the Deendayal Gram Jyoti Yojana.
Also, the Pradhan Mantri Awas Yojana plans to provide shelter for the rural people of India.
If things are getting done at this pace, analysts believe that the rural income will increase in the coming years, the rural consumption of resources will get a boom which in turn would prosper the rural society.
As a result, the whole Indian business scenario will completely change. This will also impact the stock market and the trading scenario. Hence trading in such stocks provides you with outstanding stock market trading returns.
Here, we have selected some of the stocks that are likely to benefit from Modi’s rural push. These stocks can act as a long term bet for investment purposes.
Below are the top 5 stocks which may get benefit from the rural policies:
1.Mahindra and Mahindra Financial Services (MAMFS)
Mahindra and Mahindra Financial Services are India’s leading non-banking finance companies in India. The company aims at focussing on the rural and semi-urban sectors. In addition to this, the company is the largest tractor financier.
As of September 2017, the company’s AUM consisted of auto/UV (28%), tractors (17%), cars (22%), CV (12%), pre-owned cars (9% and SME (12%).
Its AUM is expected to grow at almost 17% CAGR over FY-17 to 19E to pick up the rural economy that is supported by the average monsoon from the last two years.
NCDs are forecasted to be approximately 60% of the funding mix in FY19E which will reduce the cost of funding and margin expansion by nearly 130bps.
Investing in MAMFS stocks offers you great stock trading returns.
- Hero Motocorp
Hero Motocorp Limited is the largest manufacturer of motorcycles in India having a market share of 53% as per the Q2FY18 domestic sales data. The company recovers half of the revenue from rural India.
In FY18, the total volume growth experienced by Hero motorcycle was 13% and two-wheeler was 11%. Moreover, the company is planning to launch its new brand new scooter to increase the market share in a particular sector.
With this aim (launching of the scooter), Hero seeks a 25bn Capex plan for over 2 years.
The government’s push to double the farm income, adolescent monsoon and the increment of urban income is the strongest points that will contribute towards the growth of the company.
Despite the company has made a late entry into the export market, it plans to do the exports in a double way in the upcoming years. Hero Corp seeks huge growth in the coming years and the stocks of the company will generate better share market trading returns.
- Dabur India
Every citizen of India heard the name Dabur. Dabur India is one of the fast-growing FMCG companies in India that diversified its business majorly into the 4 segments: consumer care, retail, food and international business.
The company behaves like a beneficiary of rural expansion and development of existing as well as new products.
The company’s main products Dabur toothpaste and juices are the products that drive the company’s major revenues as the toothpaste are already reaching the rural areas.
To revive its rural consumption, Dabur India plans to penetrate nearly 60,000 villages.
The additional products launched by the company such as hair care, fruit drink and other ayurvedic products help Dabur to increase its volume growth.
Also, the company’s recent acquisitions in the African market in the hair care and personal segment strengthens its online presence with e-retailers which in turn will generate high profits.
- Rallis India
Rallis India is a vast manufacturer of fertilizers, pesticides and fine chemicals. The company is an active member of the Tata Group, which aims to improve the quality and yield of the crops through the Rallis Samridh Krishi.
This is a digital initiative taken by a Tata group that helps Indian farmers end to end Agriculture solutions.
Apart from launching the Rallis Samridh Krishi Yojana, the company is planning to launch its new products in wheat, rice, cotton and hybrid cotton segments.
By doing this, the company’s objective is to increase the market share of the Non-Pesticides Portfolio.
Rallis India also plans to increase its focus on plant growth to support the sustainability of crop yields.
The company is targeting a 20% sale’s increase from its subsidiary Metahelix.
- Jyothi Laboratories Ltd
Jyothi Laboratories Ltd is a renowned name in the homecare sector. The company is known for producing soaps and detergents for home care.
Although Jyothi laboratories is a south India based company, it has spread business in multiple sectors that would help it grow its market share in the respective categories.
The six powerful brands of Jyothi Laboratories are – Ujala (fabric whitener), Henko (fabric detergent), Exo (Dish Bar), Margo (Bath Soap), Prill (Dish wash) and Exo (Dish Bar).
These products contributed nearly 87% of revenue in FY17. Keeping this in mind, analysts have predicted that by investing in Jyothi’s laboratories, investors would generate better returns than other mid-cap stocks.
With the government’s initiative to strengthen the rural sectors, the companies stated above are doing their best towards rural growth. As a result, the stocks of these companies are likely to increase in the upcoming months.
Therefore, many analysts recommended these stocks by giving them a positive sign.
Stock’s performance has always remained uncertain. That’s the reason, analysts have to keep an eye on stock price movement. They use different tools and charts to analyze the stock’s performance in order to predict its future potential value.
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