As we recommend a few stocks ahead of Budget 2019, we are unsure whether it would be an interim budget or there would be significant recommendations.
On the other hand there is no clarity whether the Union Budget would be delivered by Acting Finance Minister, Piyush Goyal or it would be delivered by Arun Jaitley.
However, we have recommended a few stocks based on hopes in Budget 2019 for the distressed farm sector.
Hero Motor Corp
Should there be a big boost for the agricultural sector in the forthcoming Budget, which looks almost certain, two wheeler major, Hero Motor Corp could be a big beneficiary.
A good thing about Hero Motor Corp is that the stock is available at Rs 2,798 and has fallen from levels of Rs 3,825. Even at the current market price, the shares are giving you a decent dividend yield of near 3.5 per cent.
Now, there are two things that may happen in the Union Budget that may benefit the company. The first is that we may see the income tax limit being raised or Sec 80C limit being raised. If this happens, it tends to benefit a player like Hero Motor Corp, as disposable income increases.
Similarly, Hero MotorCorp is considered a good rural play and benefits for farmers in the forthcoming budget should augur well. The stock is also available at a p/e of just 15 times one year forward earnings, making it a good pick. Check stock quote of HeroMotor Corp here
Mahindra & Mahindra
Mahindra and Mahindra too is a good play on the rural sector. The company is the largest tractor seller in the world. Here again, should the budget increase the outlay for the farming sector or boost the income of the farmer, it could benefit a player like Mahindra and Mahindra.
Interestingly, most of the stocks from the space have lost ground and Mahindra & Mahindra is trading very close to its 52-week low of Rs 700.
The stock is trading at a p/e of just 15 times one year forward earnings. With a significant number of product launches and focus on innovation, the stock has a low downside risk, unless the markets collapse.
UPL is a leading manufacturer of crop protection products and has 5884 product registrations and 241 patents. Today, 86 per cent of its revenues comes from branded products.
It offers a range of crop protection products, such as herbicides, insecticides, fungicides.
The company has been able to perform very well in the last few years, with 2017-18 seeing a 7 per cent increase in margins despite a slowdown in the industry.
A boost to the farming sector in the Budget 2019, may see some activity in the stock. We wish to state that on a fundamental basis the stock is not very cheap.
Kaveri Seeds is one of the fastest growing seed companies in India with a large network of over 15,000 distributors and dealers spread across the country. With over 883 employees and a strong product line of hybrids.
Kaveri's draught and disease resistant as well as high yielding hybrid and varietal portfolio includes Cotton, Corn, Rice, Jowar, Bajra, as well as vegetable such as Tomato, Okra and gourds.
The company is likely to be one of the beneficiaries of Budget 2019, if significant changes are made for the farming sector.
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