Modi Stocks: How Have CLSA's Picks Fared In Past 11 Years? Details Here
'Modi stocks' is a basket created by analysts at CLSA during the general election last year.
The 11 years of the Modi government have been marked by a significant rise in economic growth and a booming stock market. The top 10 best-performing companies that are part of the multinational brokerage firm CLSA's 'Modi Stocks' have shown strong growth in both returns and earnings.
Leading the list is Adani Enterprises Ltd. with 40% stock market returns and 24% EPS growth on a compounded annual basis, as per NDTV Profit calculations.
This is followed by Bharat Electronics Ltd. at 33% returns and 18% EPS growth.
JK Cement Ltd. stands out with the highest EPS growth at 35%, along with 26% returns.
Other notable performers include Indian Hotels Ltd., and Hindustan Petroleum Corp., both with 23% returns and EPS growth of 27% and 19% respectively.
Power sector PSUs REC Ltd. and Power Finance Corp. also demonstrate solid performance, with returns of 22% and 20% respectively, and EPS growth of 12% and 16%.
Ashok Leyland Ltd., Siemens India Ltd., and Cummins India Ltd. round out the list, each with strong returns of over 20% and double-digit EPS growth.
On the other hand, there are only three stocks that have given negative returns during the Modi years.
Debt-laden Vodafone Idea Ltd. has declined 21% on a compounded annual basis.
Punjab National Bank Ltd. and Oil and Natural Gas Corp. also had negative returns at 4% and 2%, respectively, but their EPS growth was positive at 12% and 18%.
High Expectations
A look at market expectations on some of these 'Modi Stocks' indicates potential upside in their share prices. REC and PFC are the top two companies with the highest expected returns, at 42% and 30% respectively, according to a consensus analyst price target compiled by Bloomberg. NTPC Ltd. follows with a potential return of 26%.
Adani Enterprises and Adani Ports Ltd. also have high expectations, with potential returns of 25% and 23%. Other companies on the list with strong return potential include Mahanagar Gas Ltd. (20%), ONGC and Hindustan Aeronautics Ltd. (both at 19%), and GAIL Ltd. and HPCL (both at 18%).
What Are Modi Stocks
'Modi stocks' is a basket created by analysts at CLSA during the general election last year. It refers to companies that are direct beneficiaries of various policies adopted by the Narendra Modi-led government.
These are capex and infrastructure-linked sectors, PSUs, or stocks of some large corporate houses. The brokerage identified 54 out of 183 stocks as 'Modi stocks'. Of these, 27 are PSUs.
Larsen & Toubro Ltd., NTPC, NHPC Ltd., PFC, ONGC, Indraprastha Gas Ltd., Mahanagar Gas, Bharti Airtel Ltd., Indus Towers Ltd., and Reliance Industries Ltd. are some of CLSA's preferred stocks in this category.
