Experts views on top 10 stocks for the Rural Development:
Experts views: The central government allocated more funds towards rural development by reducing taxes, and it put an end to Dividend Distribution Tax (DDT) for development. Due to the income of the farmers and rural development slowdown, the government allocated Rs 1.3 lakh crore in the budget for the development of agriculture and farmer’s welfare.
The allocation of funds includes a Rural employment scheme (NREGS) of Rs 615 bn, Rural roads (PMGSY) of Rs 195 bn, and Rural housing (PMAY-G) of Rs 275 bn. However, the government also increased the allocation towards agriculture & farm welfare by 32% to Rs 1,343 bn.
“However, this year rabi output also increased with good farm price and that improves the rural development also helps to the overall GDP growth”, said Kotak Securities Ltd. The experts suggested that the government is taking good decisions for rural development that takes some time for the results to show.
“We believe that rural development will help GDP growth. Whereas the Rabi crop reported an increase of 9.5% higher that will help the agriculture and farm welfare”, said Gaurav Dua, Sr VP, Head – Capital market strategy & Investments.
We have gathered a list of stocks to invest and that will benefit the rural development in India:
Expert: Aditya Jhawar, Agri Research – Investec India
From the top 10 stocks, our first suggestion is Rallis India. Rallis India is a domestic Agro Chemicals space, that encourages both domestic as well as export business. The companies revenue growth increases to 28% YoY in Q3FY20.
Expert: Gaurav Dua, Sr VP, Head – Capital market Strategy & Investments.
The NDA government’s main focus is to double the income of the farmers for that reason they are introducing new policies to farmers. From agriculture, we prefer:
The government allocated 2,83,000 crore for agriculture, irrigation, and rural development for this fiscal year and set a target of Rs 15 lakh crore.
This company promotes the use of organic fertilizers rather than excessive use of chemical fertilizers.
Whereas, the tax on imports and exports of footwear company increased by 35% from 25%. The increase will affect the imports of the footwear company. Whereas it benefits the company like Bata India and Relaxo footwear.
Dabur company reported its operating performance for this quarter of the financial year 2020 maintains steady growth. The company maintains its trust in innovations and expansions to gain profit share in the market.
Spandana Sphoorty Financial Limited (SSFL) is a top company that offers income generation loans under the joint liability group model (JLG).
Expert: Rusmik Oza, Head of fundamental research at Kotak Securities Ltd
Escorts and M&M:
However, these two companies are expecting more demand for tractors in this financial year compared to FY20.
The Non-Banking Financial Companies like M&M financial. It gives loans to rural customers. Whereas, the most consumer durable and discretionary companies are trading at extremely high numbers.
Expert: Deepak Jasani, Head of Retail Research.
The rural development growth depends on the outcome of the rabi crop, monsoon spread within the right time, and Kharif output.