Monsoon Stocks 2024 :The IMD has predicted an above average monsoon (106% of LTA) in 2024, indicating the possible development of La Nina conditions during the second half of the monsoon season. This year a normal monsoon is expected to be beneficial for agriculture (Indian Agriculture) and if this remains so, then rural demand (Rural Income) will also increase. Which will benefit sectors like agrochemicals, fertilizers, tractors and FMCG. Brokerage house Motilal Oswal has selected some such stocks (Monsoon Stocks) from these sectors, which can benefit from good monsoon (Monsoon in India). Good returns can be achieved by including these stocks in the portfolio for the short term.
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Contribution of monsoon to the economy
More than 60 percent of the cultivable land in India is such where there is no proper arrangement for irrigation. In such a situation, farmers in those areas depend on rain for farming. In this season, crops like rice, maize, pulses, cotton and sugarcane are dependent on monsoon. With the increase in production due to better monsoon, the prices of food items will remain under control.
Monsoon Basket: Stocks and Weightage
Cholamandalam Finance: 20%
Dabur India: 20 percent
Escorts: 20 percent
Imami: 20%
Coromandel International: 20 percent
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Cholamandalam Finance
It is set to deliver strong AUM growth with soft credit costs, translating into a sustainable RoE of 21-22% over the economic cycle. CIFC plans to increase its PBT-RoTA at the company level to 3.7% (FY24: 3.4%) over the next two years. It also plans to drive RoA expansion in new business by maintaining higher productivity and improving the OPEX ratio.
Dabur India
It has achieved the remarkable feat of becoming the leading player in the oral care market in Odisha, Karnataka and Andhra Pradesh, reflecting Dabur’s strong market presence. Its well-managed volume trajectory and effective price adjustments have contributed to revenue growth. Operating margins also have scope for improvement. Dabur’s international business has shown impressive double-digit growth. Dabur has expanded its rural coverage, placing the company in a leading position to reach rural consumers, an area with significant growth potential.
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Escorts
Kubota’s parentage will help Escorts improve its competitive position in a) small tractors (less than 30 HP), export markets (by leveraging Kubota’s distribution network), agri implements business, d) component sourcing, and e) construction equipment business. Through this partnership, Escorts will have access to global product know-how (in tractors and implements), a global distribution network, and a global supply chain.
Coromandel
The operational performance of the crop protection business is expected to improve from 1QFY25. New businesses such as Specialty Nutrition Division (SND), bio-products and retail store business are expected to grow by 10-15% going forward. Moreover, the profitability of these businesses is also expected to improve over time.
Emami
The company is optimistic about future growth supported by favourable economic scenario such as normal monsoon forecast, anticipated rural market recovery and government initiatives. The company sees signs of improvement in the market with the rural sector gradually getting back on track. The company expects moderate price growth for FY25, which will limit it to the range of 2-2.5%. The management has taken several steps in the last 3 to 4 years to revive volume growth.
(Note: Here we have given information about the shares based on the reports of the brokerage house. Considering the market risk, take expert advice before investing.)