Saturday, 11 July 2020

5 Fundamentally Strong Stocks to Buy on Good Monsoon Predictions in India for 2020

Posted by MyInvestmentsPub
(Published on 11-July-2020)

The India Meteorological Department (IMD) announced that it expects monsoon rainfall to be normal this year, 2020. The rainfall as a whole is likely to be in the range of 96% to 104%, which is normal rainfall according to IMD. The AccuWeather Senior Meteorologist also predicting the normal monsoon season in India this year.  A good monsoon creates positive perception about the economy among investors, including foreign institutional investors, as a large part of India depends upon agriculture for sustenance. This is definitely a positive sign to some sectors and stocks. Because of the good rains, the rural incomes will rise and create demands to some specific stocks. Though the entire country is facing several issues like Corona, China war, unemployment etc., the Agriculture sector will boost other sectors also. We will see what are the best monsoon stocks that are fundamentally strong stocks to invest for long term.

5 Best Stocks to buy on Good Monsoon Predictions in India:

India is a country whose economy is highly dependent on agriculture sector, which is generally influenced by changes in rainfall. Many Indian companies depending their earnings mainly from the rural areas. Some companies directly dealing with Agriculture markets where as some companies are indirectly benefiting from rural consumption. The following 5 stocks would benefit most from the normal monsoon predictions in India for this year, 2020.

1. VST Tillers Tractors:

A better monsoon spurs demand for tractors from farmers for various cultivation works during this season. This in return increases companies sales and margin which results in good stock performances. VST Tillers Tractors is a market leader in small tractors (less than 20 HP) which are popular in India now-a-days. Increasing presence in farm mechanization through products such as power tillers and paddy trans-planters making VST Tillers & Tractors an attractive stock for long-term bet.

CMP: 1317 ,   Expected Target: 2000 - 2500  Timeframe: 1 - 2 years

2. Hero MotoCorp:

The good monsoons would definitely increase the consumption rate from rural India. From the last few years, Govt. of India taking keen interest on developing the basic Infrastructure like Roads, water, Electricity in rural areas. This will increases the demand for transport sector. Hero Motocorp which is enjoying top position in 2-wheeler motor bikes manufacturer in India , is one of the defensive bets worth investing now.

 
CMP: 2679 Expected Target: 2900 - 3500  Time frame:  1 year

3. Kaveri Seed Company:

Good rainfall would definitely creates demand for quality seeds. Kaveri Seeds (KSCL) which is one of the top three seeds companies in the cotton, corn, sunflower, and pearl millet/ bajra segments, and top five in the paddy segment would definitely benefit from the expected good rainfall in India for this year, 2020. Kaveri Seeds (KSCL) appears to be a company growing at a faster pace, with sustained profitability margins & operating efficiency.

CMP: 569,  Expected Target: 670 - 690, Time-frame: 1 Year

4. Manappuram Finance: 

A good monsoon means better agriculture productivity. For this sector, the normal rains comes as expansion in credit, improvement in timely repayment of loans and asset quality improvement. Manappuram Finance is witnessing healthy financial growth across all business segments. Its diversification efforts paid off as overall growth is well supported by robust growth witnessed in new businesses.Company is expecting strong growth momentum in gold loan segment from rural India.

CMP: 160, Expected Target: 225 - 300, Time-frame: 1 - 2 years

5. PI Industries: 

Pesticides comprise a large group of chemicals that are used in agriculture to control plants and animals infestation. Pesticides, being the last input in agricultural operation, are used for preventing the destruction of crops from pests like insects, weeds, etc, thereby increasing the agricultural production. PI Industries Limited (PI) is an agri-sciences company with strong presence in both domestic and export market. The company has three manufacturing facilities in Gujarat and a Research & Development center at Udaipur. PI Industries is a leading player in providing custom synthesis and manufacturing solutions (CSM) to global agro-chemical players. The CSM business accounted for 72 per cent of the company’s revenues in FY20 and is expected to be the key growth driver for the company in future.

CMP: 1758, Expected Target: 1850,  Time frame: 1 + years

Selection Criteria:

  1. All the above stocks are suitable for Medium to high risk profile investors 
  2. All the above stocks are picked on medium to long term basis with Strong buy recommendation
  3. All the above stocks are market leaders in their respective sectors
  4. All the above stocks are fundamentally strong and technically available at cheaper price
  5. All the above stocks are having good track record during good monsoons

Disclaimer:

This data is for Academic purpose only. The data published on this post is just my opinion based on my own research and analysis and is provided as a general market commentary. As it does not take into account of your personal circumstances, please do not invest based solely on this information. By Viewing any material or using the information within this post you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general information provided here.

1 comment:

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