Here is a list of 4 stocks which investors can look at buying ahead of elections:
State Bank of India:
The assets quality has been improving with the declining stress additions. For FY20, the management expects slippages to decline to Rs 24k-30k crore.
The net interest margins (NIMs) has been on improving trend led by lower slippages and supported by large low-cost deposits franchise.
The management aims for a 3 percent NIM in a year’s time. On the growth front, advances have picked up to the industry level growth which seems to be the key positive for the bank. SBI has approved capital raising plans of Rs 20000 crore in the year FY20.
Larsen & Toubro:
There is a strong order book of Rs 2,95,000 crore with an order inflow of Rs 55,000 crore at the end of March quarter. The company has laid down audacious target of order inflow of 10-12 percent with revenue guidance of 12-15 percent.
The working capital is aimed at getting lower to 18 percent. Capacity Utilization of the country has improved to 74 percent.
Reaching close to 80-85 percent utilization will open avenues for increased CapEx in the country and L&T should be the key beneficiary.
The bank has shown a strong turnaround on the asset quality front on account of decline in slippages as well as good traction in recovery and up-gradation.
Even the stress pool (BB & below) has declined and 93 percent of corporate slippages were from the stress pool. Provisioning coverage ratio (PCR) of the bank is 76 percent, which is the best among its peers.
Moderation in NPA addition, lower credit cost and improvement in margins will boost the profitability in FY20. The management targets consolidated ROE of 15 percent in the near term and will relook at the target once credit cost normalizes.
The company is likely to benefit from changes in Government policies and also increased thrust on defense spending going forward. BEL expects Rs 150 bn order intake in FY20.
Finalization of the Akash missile order is expected to post the CCS Committee approval. Margins are expected to remain stable.
There is an order backlog of Rs 484 billion (+19.6% YoY) at end-3QFY19, which provides strong revenue visibility. The company is currently trading at 11times FY21E EPS.
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