Promising Stocks to look at before Budget 2021

By Angel Broking | Published on 28th January 2021 | 805

Promising Stocks to look at before Budget 2021

Considering the fact that the nation is now rebounding from the COVID-19 induced slump, there’s no doubt that Budget 2021 is arguably one of the most important budget presentations in recent years. That said, if you’re looking for some promising stocks to invest in before budget 2021, here’s a list of hand-picked stocks from our research team that might interest you.

Automobile Industry

The automobile industry surprisingly sprung back into action once the COVID-19 lockdown was lifted. The sales of two-wheelers, PV, and tractors all saw a strong rebound. Medium Commercial Vehicles (MCVs) and Heavy Commercial Vehicles (HCVs), however, still seem to be on the backfoot. 

Among the many expectations from budget 2021 is the introduction of an incentive-based scrap page policy. If the policy makes its way into the budget announcement on February 01, 2021, it could make it mandatory to dispose of vehicles beyond a certain age. This would, in turn, create more demand for new vehicles in both the light and commercial vehicle segments.

So, here are some of the best stocks to buy before budget 2021 from the automobile industry. 

Ashok Leyland:

Being in the Light Commercial Vehicle (LCV) and Heavy Commercial Vehicle (HCV) segment, Ashok Leyland is likely to gain from the introduction of the incentive-based scrap page policy. Here are some of the key expected figures for the company. 

CMP (Rs.) Target Price (Rs.) Sales 

(Rs. in crores)

PAT 

(Rs. in crores)

ROE 

(%)

P/E 

(x)

FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E
117 140 13,952 20,958 (178) 758 (0.6) 2.5 45.4

Escorts:

One of the leading tractor manufacturing companies in India, Escorts Limited is already seeing some of its sales rebounding. The company is likely to keep this up in the future as well. Here are some of the key expected figures for the company.

CMP (Rs.) Target Price (Rs.) Sales 

(Rs. in crores)

PAT 

(Rs. in crores)

ROE 

(%)

P/E 

(x)

FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E
1,225 1,573 6,523 7,464 773 882 15.2 15.1 21.4 18.7

Agriculture

With the government expected to increase its focus on the agriculture industry, especially in the rural sector, companies operating in the sector are likely to get a positive boost. As a result, there’s likely to be an increase in the demand for farm equipment and other agriculture input products like fertilizers. Considering these factors, here’s a quick look at one of the best stocks to buy for 2021 in India in the agri sector. 

Coromandel International:

The company is in the business of manufacturing fertilizers, pesticides, and other specialty nutrients that are commonly used in agriculture. And so, Coromandel International is likely to witness a positive demand boost in the future. 

CMP (Rs.) Target Price (Rs.) Sales 

(Rs. in crores)

PAT 

(Rs. in crores)

ROE 

(%)

P/E 

(x)

FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E
839 971 14,460 15,658 1,452 1,578 29.8 26.3 16.9 15.6

Cement

Another major point in focus in the Union Budget 2021 would be the Infrastructure and Housing sectors. With the government investment in infrastructure not likely to wane any time soon, cement manufacturing companies are likely to do well in the future. If you’re looking for budget stocks 2021 in the cement industry, here’s an option for you. 

JK Lakshmi Cement:

One of India’s leading cement manufacturers, JK Lakshmi Cement has been in the industry for more than 3 decades and is likely to enjoy an increased demand for its products. 

CMP (Rs.) Target Price (Rs.) Sales 

(Rs. in crores)

PAT 

(Rs. in crores)

ROE 

(%)

P/E 

(x)

FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E
325 422 4,151 4,505 315 333 14.5 17.0 12.2 11.5

Consumer goods:

Since it is vital to address the issue of low consumer spending, the government may try to provide tax breaks to put more money into the hands of people in the hopes of revitalizing demand for consumer goods. The deduction limit under Section 80C of the Income Tax Act may be raised for people choosing to adopt the old income tax regime. As for the new optional tax regime, the government may choose to extend it to individuals earning more than Rs. 15 lakh per annum as well. If this comes to pass, the increased purchasing power may boost the consumer goods industry, and here’s one of the stocks to invest in before budget 2021 from this segment. 

Whirlpool India:

Consumer white goods manufacturer, Whirlpool India is likely to be one of the beneficiaries in the event where the government does get around to providing tax incentives to the public. The demand for the company’s products may witness a sharp rise. 

CMP (Rs.) Target Price (Rs.) Sales 

(Rs. in crores)

PAT 

(Rs. in crores)

ROE 

(%)

P/E 

(x)

FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E
2,668 3,032 5,607 6,448 337 485 18.0 24.0 100.5 69.8

BFSI

Considering the fact that the companies operating in the BFSI space provide lending and financing solutions to both individuals and enterprises, the likelihood of them enjoying a significant boost to their loan book after the Budget 2021 presentation is high. An increase in demand for automobiles and housing can be a big boost to BFSI companies in the near future. Here are a couple of best stocks to buy before budget 2021 in the BFSI space. 

LIC Housing Finance:

LIC Housing Finance is easily one of the country’s largest housing finance and mortgage loan providers. And so, along with a boost in the housing sector, the company is also likely to witness higher Net Interest Income due to an increase in its loan book. 

CMP (Rs.) Target Price (Rs.) NII

(Rs. in crores)

PAT 

(Rs. in crores)

ROE 

(%)

P/BV

(x)

FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E
414 570 5,149 5,874 3,252 3,577 16.3 15.3 1.3 1.0

Shriram Transport Finance Corporation:

Commercial vehicle loan provider, Shriram Transport Finance Corporation is also set to enjoy a boost in its loan book if the government introduces the incentive-based scrap page policy. 

CMP (Rs.) Target Price (Rs.) NII

(Rs. in crores)

PAT 

(Rs. in crores)

ROE 

(%)

P/BV

(x)

FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E
1,201 1,440 8,352 8,924 2,106 2,714 11.1 12.9 1.7 1.5

Conclusion

Now that you know what the best stocks to buy for 2021 in India are, all that remains is for you to go out there and invest. That said, although all of the budget stocks 2021 contained in this list are backed by research reports, it is not a guarantee of the stock price movement. 

There’s always the element of uncertainty when it comes to investing in the stock market. And so, always make sure that you do your own research to arrive at an independent evaluation before investing in either of these companies.