Tradebulls Securities has declared their top picks after the union budget of 2017. According to Rajen Shah of Tradebulls, this year’s budget is the masterstroke of the Prime Minister Shri Narendra Modi. The budget focusses on agriculture, rural areas and on affordable housing. According to him, India Cements Ltd is going to be one of the most performing scrips after the budget of 2017.
Two things in this world are of the utmost importance to the human being. One is food and the other is the residence. So for food, this year’s budget has focussed on agriculture and due to which food inflation will be under control in the coming few years. And for residence, the definition of affordable housing has been totally changed. The 30 square meter and 60 square meters salable built-up has been converted to the carpet area and the industry has got the status of infrastructure.
So this move will give a major push to the cement industry, steel industry, sanitary ware industry, electrical cable industry. Because every industry will be benefitted when there will be a boom in real estates. Tradebulls seemed extremely positive on the stock market now. India Cements Ltd is their first pick because this budget has substantially increased the infrastructural outlay, as well as affordable housing, has received infra status.
So the cement volumes will see a marked growth in the coming days. Now why India Cements Ltd is the best of the cement lot? Because in the south, even in Andhra-Telangana substantial volume growth is seen in cement demand. There is a development of new capital, new state. Shri Chandrababu Naidu sees 15% growth in Andhra. So in south India, cement volumes will be quite strong. Valuation-wise there are ACC, Ambuja, and Ultratech whose enterprise value per million tonnes are between 800-1000 crores, while Ramco Industry of South India, who is a competitor of India Cements Ltd, has an enterprise value of 1100 crores per million tonnes while India Cements are available at 550 crores per million tonnes. Ramco’s market cap is 17000 crores which are still less capacity than India Cements Ltd. At the same time, India Cement’s market cap is 5000 crores and debt is 3500 crores so total is 8500 crores. So this company is available almost at half rate.
Tradebulls recommends buying India Cements Ltd CMP 164 (6th Feb) for a 1-year target of 240.