Two-wheelers, tractors, consumer durables, FMCG and fertilisers are some of the sectors that are favourably impacted by a good monsoon. All eyes will be on these sectors as the monsoon progresses next month, analysts said.
“Expectations of a normal monsoon in 2022 and elevated food prices have brightened the outlook for rural income in FY23. Net of farm costs, we expect kharif income to grow by 10.1 per cent YoY in FY23 atop 9.5 per cent YoY in FY22. Channel checks are encouraging,” said BofA Securities.
There are two cropping seasons in India. Kharif crops are sown during monsoon and harvested in October-November. Rabi crops are sown during October-December and harvested in March-April. While rice is the key kharif (summer) crop, wheat is the main rabi (winter) crop.
BofA Securities said net rabi income is expected to grow 12 per cent YoY in the ongoing season against 3 per cent yoy last year. Non-agri wage growth is looking up too, it said in a note.
India has India has been consecutively receiving a favourable pattern of rainfall over the last three years i.e. 110 per cent of LPA in 2019, 109 per cent of LPA in 2020 and 99 per cent of LPA in 2021, said Siddharth Sedani – Vice President, Equity Advisory, Anand Rathi Shares and Stock Brokers.
“Normal to good monsoon is positive for domestic farm input sector including farm mechanisation as well as rural consumption in consumer durables as well as FMCG space also it will boost agri-sector income in the near future. This will also have an engulfing impact on other Industries such as steel, cement, tractor and two-wheeler,” Sedani said.
Vinod Nair of
said investors would be keenly looking at distribution of rainfall in June. If the monsoon goes well, he said, monsoon-related stocks may hog limelight, he said.
These are the five stocks Sedani suggests investors to watch out for (duration 1 Year):
Tata Consumer | Target Rs 904
Tata Consumer with its presence in high growing categories supported by consumption shift to packaged food. Moreover, tailwinds of at-home consumption should continue to aid growth. Higher volume traction in India business, digitization across the supply chain coupled with synergy benefits in upcoming periods are the key growth drivers.
| Target Rs 6,039
The company enjoys a unique position in the market because of its capability to offer new innovative products, technologies, processes, services and business models. Management remains confident in the company’s long term growth story Further, the merger will bring additional value to Bayer’s core portfolio via complementary products from Monsanto India. The full benefits of the merger will start reflecting from FY22.
| Target Rs 1,012
We continue to remain positive on the company on the back of its strong business model, good monsoon, high operating cash flows, strong balance sheet, new product launches, fast growing organic nutrients business and agriculture reforms.
| Target Rs 890
We remain positive on ICICI Bank, considering a strong balance sheet, sticky liability base, high provision coverage and adequate capital adequacy, strong growth in advances, high casa ratio and improving asset quality.
| Target 200
Volume off-take continues to remain robust for Ashok Leyland on the back of improvement in economic activity and increasing freight utilisation levels. Launches in CNG aided market-share expansion. Demand for buses is expected to return strong in subsequent quarters, and the EV order book continues to grow.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)