digitalplutoBest Stocks to Buy After the Election
On the day of the election, lets see the Best Stocks to Buy After the election, while the entire stock market was plummeting, there were two stocks whose prices were soaring through the roof. The reason behind this will absolutely shock you and make you realize just how far-sighted some investors can be. I’ll reveal the name of the first stock a bit later, but first, let’s understand the reason behind its surge.
Table of Contents
- Heritage Foods Limited: Riding the Chandrababu Naidu Wave
- Amara Raja Energy & Mobility Limited: Benefiting from Chandrababu Naidu’s Connections
- FAQ
Heritage Foods Limited: Best Stocks to Buy After the Election: Riding the Chandrababu Naidu Wave
The company that saw this massive price increase was actually founded by none other than Chandrababu Naidu himself—the same Chandrababu Naidu who is an essential ally for the BJP government to form. As soon as it became clear that the BJP would not be able to form a government on its own and would need the support of Chandrababu Naidu and Nitish Kumar, investors realized that Chandrababu Naidu’s company would greatly benefit from this. This led to a surge of buying, causing the company’s share price to rise steadily over the past five days, almost reaching a 50% increase.
The promoters of this company are none other than Chandrababu Naidu and his family, who collectively hold around 35% of the company’s shares. With a market capitalization of around ₹5,500 crores, this stake amounts to a massive ₹1,750 crores. The company is now considered one of the best stocks to buy after the election, given its strong political connections and the recent surge in its share price.
Heritage Foods’ Business and Financials
Heritage Foods Limited operates in two business divisions: Dairy and Renewable Energy. The company sells milk, curd, buttermilk, flavored milk, paneer, butter, and sweets. According to their website, they have 15 lakh families who consume their products daily, 859 franchisee partners, and more than 3 lakh farmers who supply milk to them twice a day.
In the financial year 2022, 67% of their revenue came from milk, 24% from value-added products, 5% from fat, and the remaining 4% from other verticals. The company has shown consistent growth, with sales increasing by 16.26% year-over-year in the March 2024 quarter compared to the previous year.
| Metric | Value |
|---|---|
| Market Capitalization | ₹55,500 crores |
| Return on Equity | 31.9% |
| Return on Capital Employed | 16.8% |
| Debt-to-Equity Ratio | 0.16 |
| Free Cash Flow | ₹267 crores |
However, the company’s operating profit margin is only around 5%, which is why, despite the ₹3,794 crores in sales in FY24, the net profit was around ₹107 crores. It’s worth noting that this is not a buy-or-sell recommendation but rather an educational exercise to understand how an investor’s mindset works.
Amara Raja Energy & Mobility Limited: Best Stocks to Buy After the Election: Benefiting from Chandrababu Naidu’s Connections
The second stock that has seen a massive surge in price for similar reasons is Amara Raja Energy & Mobility Limited. The co-founder and managing director of this company, Jaydev Galla, is a former TDP (Telugu Desam Party) MP from the Guntur district, which is directly linked to Chandrababu Naidu, the head of the TDP party.
Amara Raja is a large-cap stock with a market capitalization of around ₹23,000 crores. The company’s main business is the manufacture of lead-acid batteries for industrial and automotive applications. In fact, the company’s name might sound familiar to you, as its stock price had seen a significant surge during the initial days of the electric vehicle (EV) hype.
Amara Raja exports its batteries to more than 50 countries and supplies products to major telecom service providers, telecom equipment manufacturers, the UPS sector, Indian railways, and the power, oil, and gas sectors in India. Around 68% of the company’s revenue comes from its automotive battery division, and the remaining 30% is from the industrial battery division.
In the context of the best stocks to buy after the election, Amara Raja stands out due to its strong market position and diversified revenue streams.
| Metric | Value |
|---|---|
| Revenue (FY24) | ₹11,260 crores |
| Operating Profit | ₹1,621 crores |
| Net Profit | ₹906 crores |
| Revenue Growth (CAGR) | 16% (3 years) |
| Profit Growth (CAGR) | 12% (3 years) |
The company has shown impressive financial performance, with revenue and profit growing at a healthy pace over the past few years. In the March 2024 quarter, the company reported sales of ₹2,797 crores, which is 14% higher than the same quarter in the previous year.
It’s clear that the market is betting on the potential benefits these companies may reap from Chandrababu Naidu’s political influence and connections. While this may be a valid investment thesis, it’s crucial to thoroughly analyze the fundamentals and risks before making any investment decisions.
FAQ
- How can Chandrababu Naidu’s political influence benefit the stocks of companies he is associated with?
- Investors believe that if Chandrababu Naidu’s party becomes an important ally in the new government, the companies he is associated with, such as Heritage Foods and Amara Raja, could receive favorable treatment and policies, leading to increased business opportunities and profitability.
- What are the potential risks of investing in these stocks based on political connections?
- The performance of these companies should not be solely based on political connections, as there are always risks associated with relying too heavily on such factors. It’s essential to thoroughly analyze the fundamentals, financials, and long-term growth prospects of the companies before making any investment decisions.
- How can investors research and analyze these stocks further?
- Investors can review the companies’ financial statements, industry trends, competitive positioning, and management quality to gain a comprehensive understanding of their business and growth potential. It’s also recommended to consult with a financial advisor before making any investment decisions.
Remember, investing in the stock market carries inherent risks, and it’s crucial to do your own research and consult with a financial advisor before making any investment decisions. The information provided here is for educational purposes only and should not be considered a buy-or-sell recommendation.
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