The BJP led NDA is returning to power with a solid majority in elections 2019. There are hopes that the mandate, which is even better than 2014, would unleash a fresh wave of reforms. Here are 5 stocks that could benefit from the BJP's election victory.
NBCC is a government owned enterprise that is largely engaged in project management consultancy, engineering procurement and construction and real estate development.
The company already has massive orders on hand.
The new BJP led government is likely to focus on infrastructure development after a resounding victory, which is likely to benefit a player like NBCC.
In 2020-21, the company can report an EPS of Rs 5, which makes the stock attractive at a p/e of around 11 times.
With the government likely to lay an emphasis on infra development, we believe that the stock is likely to benefit immensely from a 2-3 year holding period. Buy the stock from a medium to long term perspective.
IDFC First Bank
This Bank was formed by the merger of IDFC Bank, and Capital First Limited. The merger was supported by an overwhelming majority of near 100 per cent of the shareholders of Capital First and IDFC Bank. The merger led to a very unique advantage for the bank and that was a surge in the retail assets of the bank.
The Retail Loan book increased manifold from Rs 9,918 crore (standalone Erstwhile-IDFC Bank Q2 2019) to Rs 36,236 crores (IDFC FIRST Bank, Q3 2019).
The net interest margin of the bank was 1.9 per cent, which has shot up to 3.27 per cent, immediately post the merger mainly because of the loan asset book.
The shares of IDFC Bank are trading at around 1 times book value of 2020-21 and around 12 times EPS of 2020-21. The bank is likely to see good growth, as the new BJP led government boosts economic growth.
State Bank of India
In the next 5-years there is a complete possibility by the new BJP government to lay an emphasis on the turnaround of government owned banks. The biggest benefeciary of this would be India's largest bank, State Bank of India.
Apart from this, the bank has been witnessing a solid turnaround in non performing assets and provisioning over the last few quarters.
With most of the NPA worries now behind the bank and capital adequacy at decent levels, we see high growth for the bank in the net 2-3 years.
A target of Rs 400 on the stock is highly possible. The stock of SBI can be bought at the current levels.
The shares of Yes Bank have fallen from a 52-week high of Rs 400, to the current levels of Rs 141. The biggest reason for the fall, was the loss reported by the bank of Rs 1,507 crores for the quarter ending March 31, 2019.
However, we believe that the next two quarters are going to be tough for the bank, but, beyond that we might see the bank reporting a much better performance.
By 2020-21, the bank is expected to report an EPS of Rs 12. Discounting the same at 15 times, the stock can trade at Rs 180 in the very least in the net two years, which is a decent uptick. The shares are also trading at just 1.1 times 2020-21 book value.
Formerly Nagarjuna Constructions, this company is likely to also be one of the benfeciaries of the new BJP government's thrust on infrastructure development.
NCC is a top company in BOT, Realty and International businesses. The company reported a very good performance for the quarter ending Dec 31, 2018. The company has already reported an EPS of Rs 6.91 for the nine month period ending Dec 31, 2018.
In 2020-21, we expect NCC's EPS to soar to Rs 12. Applying a p/e of 15, we believe the stock can move to Rs 180 in the next couple of years. A good long term bet with a new government in place.