PL Forecasts: PSUs to Stall, FMCG and Private Banks to Shine Post-Election Results

After the unexpected election outcomes, brokerage firm Prabhudas Lilladher is reassessing its investment strategies. It believes that the government’s policies and future decisions will significantly impact the market.

The recent election results, particularly in states like Uttar Pradesh, Maharashtra, and West Bengal, suggest challenges ahead for reforms concerning public sector companies, GST, labor laws, and retail/e-commerce. This uncertainty may hinder the re-rating of PSU stocks, along with other sectors like Capital Goods, Infrastructure, Defense, and Railways, due to their already high valuations.

Instead, the brokerage suggests focusing on sectors like FMCG, Private Banks, Auto, and Healthcare. Favorable monsoon forecasts and potential rate revisions by the RBI are expected to boost consumption and rural India.

Prabhudas Lilladher has provided a list of stocks for both scenarios:

Stocks Unlikely for Immediate Re-rating:

• Infrastructure: L&T, Adani Port, Road & Metro EPC companies
• Capital Goods: Siemens, ABB, Carborandum, Schneider, Esab, Ingersoll Rand, Kirloskar Pneumatic
• Defense: HAL, BEL, BDL, BEML, Mazgaon Dock, Cochin Ship
• Cement: Ultratech, Ambuja Cement
• New Energy: Reliance Industries, Sterling Wilson, Waree, L&T, Praj Industries
• Metals: JSPL, JSL
• PSU Banks: SBI, BOB, Canara, Union, PNB
• PSU: Across sectors including OMC
• Wire and Cable, EMS: Polycab, RR Kabel, Dixon, Amber, Keynes, Syrma

Stocks Likely to Bounce Back:

• FMCG: HUL, Britannia, GCPL, Marico, Dabur, Emami, Varun Beverages
• Auto: Eicher, Hero MotoCorp, M&M, Maruti Suzuki
• Pharma, Hospital: Sun, Max Healthcare, Lupin, Jupiter Hospitals
• Private Banks: HDFC Bank, Kotak, Axis, and ICICI Bank
• Capital Goods: Siemens, ABB, Elantas Beck, Timken, Hitachi Energy, GE T&D
• Commodities: Hindalco
• Consumer Durables/Telecom/Others: Havells India, Bharti Airtel, Delhivery, Astral, Crompton Consumer