Stocks and Company Impact Analysis

Share markets loved Finance Minister Nirmala Sitharaman’s Union Budget 2021 -- benchmark Sensex and Nifty soared as much as 5% each at the close of the day’s trade. The shining stars were banking and infrastructure shares, which jumped following the big push by the FM to clear the sludge in the system, and get the money flowing. The Budget day’s surge share markets follows a stellar rise of benchmark indices, as well as broader markets, over the last one year. Earlier, brokerage firm IIFL Securities shared its pre-budget recommendations on key stocks to watch out for gains from the Budget 2021. IIFL Securities has now updated its outlook on all the 20 stocks, explaining how the Budget impacts each one.

By IIFL Securities Ltd

Alembic Pharma

12-month target
Rs 1150

Focus on health spending a positive. Despite weakness in the US business this quarter, management has reiterated its US revenue guidance of USD400-500m by FY24, India business delivered strong growth of 14% YoY in 3Q. Budget likely positive.

CMP975.85
52 Week Range H/L1145.00 - 434.80
Market Cap (Cr)191835.78

Avenue Supermarts Ltd.

12-month target
Rs 3000

Consumption, economic recovery to boost. Sales are gradually recovering for Avenue Supermarkets, with 3Q sales up 10% YoY vs decline of 34%/12% in 1Q/2Q.

CMP2820.40
52 Week Range H/L3137.00 - 1729.30
Market Cap (Cr)1854125.50

Ceat Ltd.

12-month target
Rs 1560

Economic recovery, consumption to boost sentiments. Tyre industry volumes have recovered faster than our earlier expectations due to better than expected ramp-up in volumes in both, the replacement and OE segments.

CMP1485.95
52 Week Range H/L1564.90 - 600.00
Market Cap (Cr)60086.59

Crompton Greaves Consumer

12-month target
Rs 463

We had already upgraded FY21/22/23 EPS for Crompton by 1/6/5%, owing to faster than expected volume-based recovery in ECDs, along with share gains. Budget led economic recovery will aid this stock.

CMP410.15
52 Week Range H/L456.00 - 177.30
Market Cap (Cr)257321.55

Emami Ltd.

12-month target
Rs 550

Like other consumer sector stocks Budget is positive for Emami, which may do better that peers if we consider recent performance in Q3, where volume and sales grew 13% and 15% respectively better than market view.

CMP472.65
52 Week Range H/L504.00 - 130.95
Market Cap (Cr)211032.90

Hindustan Unilever Ltd.

12-month target
Rs 2500

Budget is largely positive for HUL as it is likely to boost consumer spending and benefit HUL. Our target is unchanged.

CMP2221.45
52 Week Range H/L2614.30 - 1757.30
Market Cap (Cr)5246794.07

ICICI Pru Life

12-month target
Rs 540

The FM proposed increasing the FDI limit in insurance to 74 per cent in the Budget from 49 per cent. This is positive for the sector and ICICI Pru is also likely to gain along with the sector stocks.

CMP475.10
52 Week Range H/L537.90 - 226.10
Market Cap (Cr)682216.60

JSW Steel Ltd.

12-month target
Rs 393

The stock will significantly benefit from infra push. The 3Q earnings were already higher than estimates, on better realisations. FY21 sales guidance of 15mt is on track.

CMP384.90
52 Week Range H/L413.10 - 132.50
Market Cap (Cr)937881.53

Jyothy Labs Ltd.

12-month target
Rs 190

Budget positive for Jyothy Labs. We expect to see consistent performance in dishwashing, acceleration in personal care and recovery in fabric care.

CMP163.00
52 Week Range H/L166.00 - 85.00
Market Cap (Cr)59855.01

Kotak Mahindra Bank Ltd.

12-month target
Rs 1900

Banking sector one of the biggest beneficiaries of the Budget. Kotak to outperform being one of the best placed banks in the banking universe.

CMP1851.35
52 Week Range H/L2027.00 - 1001.00
Market Cap (Cr)3664828.98

Larsen & Toubro Ltd.

12-month target
Rs 1635

Massive infra push and intent to help L&T and is expected to bounce back to normalcy in 4Q.

CMP1510.25
52 Week Range H/L1462.00 - 661.00
Market Cap (Cr)2124348.60

Navin Fluorine International Ltd.

12-month target
Rs 2850

With make in India – Atmanirbhar focus we see continued strong growth in Specialties for 4QFY21 as well as FY22, while CRAMS revenues are also seen sustaining. Positive for Navin Fluorine.

CMP2440.20
52 Week Range H/L2850.00 - 977.00
Market Cap (Cr)120922.35

Quess Corp Ltd.

12-month target
Rs 620

Economic recovery theme in Budget to help. Having performed commendably in 1HFY21 by cutting costs to protect earnings while also deleveraging the balance sheet by half, Quess is now on track to nearly triple EPS over FY21-23ii.

CMP588.85
52 Week Range H/L663.70 - 165.00
Market Cap (Cr)87625.25

Rallis India Ltd.

12-month target
Rs 340

Farm sector focus positive. We have already raised FY21-23 EPS by 12-22% after much better-than-expected 3QFY21 results. Margins in the Crop Care business also surprised positively.

CMP271.55
52 Week Range H/L339.80 - 125.00
Market Cap (Cr)52983.05

Reliance Industries Ltd.

12-month target
Rs 2055

We had already upgraded RIL’s consolidated FY21/22/23 EPS by 5/2/2%, on the back of Jio, retail performance; lower tax rate, and higher treasury. Budget-led economic recovery to boost RIL.

CMP1866.55
52 Week Range H/L2369.35 - 867.43
Market Cap (Cr)12643714.02

SBI Life Insurance Company Ltd.

12-month target
Rs 1230

To gain along with other insurance stocks owning higher FDI in sector. It remains our top pick for 2021 as its distribution channel comes back full force and the product mix stabilises with rise in share of protection.

CMP866.55
52 Week Range H/L960.45 - 519.40
Market Cap (Cr)867850.92

Siemens Ltd.

12-month target
Rs 1748

Budget is positive. Siemens’ FY20 ARA highlights the growing penetration of digitalisation across various sectors during the pandemic and the company’s long-term target of introducing next-gen clean technologies in the country.

CMP1745.00
52 Week Range H/L1732.85 - 947.90
Market Cap (Cr)631080.70

SRF Ltd.

12-month target
Rs 6400

Budget-led Atmanirbhar focus to help.

CMP5494.70
52 Week Range H/L6070.50 - 2467.65
Market Cap (Cr)326648.44

Ultratech Cement Ltd.

12-month target
Rs 6384

Another stock to benefit from infrA push. The company already expects the demand momentum to sustain, with rural demand continuing (good crop) and urban-housing picking up.

CMP6118.85
52 Week Range H/L5831.80 - 2910.00
Market Cap (Cr)1771887.92

V-Mart Retail Ltd.

12-month target
Rs 2900

Expected economy recovery to help V-Mart’s which already has a value retail model of cluster-based expansion in small towns, low price, high throughput, low operating cost and low capital employed generates ~ 20% post-tax RoIC.

CMP2450.00
52 Week Range H/L2612.50 - 1200.00
Market Cap (Cr)44658.19

These stock and company analyses share the outlook of IIFL Securities on the impact that Budget 2021 will have on select shares across industries and market capitalisations. The widgets contain the latest market price of each stock, the target price of each company over a specified time period, and a short analysis of how the budget could impact each stock. The widget has details about the 52-week high low and the PE ratio of each stock. It also contains quick links to the company's financial statements such as P&L and Balance Sheet. Readers can express their view on the stock by using the buttons at the end of the widget and can share their outlook on social media.

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Disclaimer by IIFL Securities

The views expressed in this document reflect personal views of the Analyst about the subject, company or companies and its or their securities and do not necessarily reflect those of IIFL Securities. The research analyst neither has any financial interest in the subject, company(ies) nor owns 1% or more of the Equity securities of the said company(ies) during twelve months preceding the date of publication of the report. Further, the analyst has not served as an officer, director or employee of the subject or company, nor any part of the analyst’s compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this document. The Research analyst also does not have any other material conflict of interest at the time of publication of the report.