Andhra & Naidu stocks beating PSU & Modi stocks hands down with Rs 20,000 crore boom

Outpacing "Modi stocks", a pocket of the market being used to denote capex and infrastructure-linked stocks of PSUs and corporates, scrips linked to Andhra Pradesh and PM Modi's ally Chandrababu Naidu have rallied by around Rs 20,000 crore in just 8 trading days since the election results were declared.

While the growth runway for Modi stocks may be much broader and longer, for now momentum traders are making a killing with Naidu stocks and Andhra stocks. While Modi remains Dalal Street's favourite political leader, Naidu also has his own fan following as an industry-savvy and IT-friendly politician with a long track record of being pro-reforms.

ETMarkets compiled a list of 24 stocks that have been under investor radar ever since Naidu became man of the moment on June 4 by not only winning Andhra assembly elections but also emerging as a kingmaker for PM Modi-led NDA with 16 Lok Sabha seats.

Since then, microcaps like Anjani Foods and Crane Infrastructure have rallied 69% and 53%, respectively.


Heritage Foods, which is promoted by Andhra CM Naidu's son Nara Lokesh, is up about 40%. Other stocks like KCP, The Andhra Sugars, Pennar Industries, NCL Industries, KNR Constructions, Amara Raja and cement companies from the coastal state have given healthy double-digit returns during the period.

The combined market capitalisation of these 24 stocks has gone up by around Rs 20,198 crore to Rs 2,18,889 crore since June 4.

"Naidu has a strong reputation as a growth and development oriented leader. Now he has not only come back as the chief minister of Andhra Pradesh but his party is also part of the NDA government. Investors are, therefore, expecting that the 'jugalbandi' between state government and central government will improve growth prospects," Sunny Agrawal, Head of Fundamental Equity Research, SBI Securities, told ETMarkets.

Also read | Down but not out! 4 reasons why you shouldn't write off PSU stocks yet

Investors are hoping that Naidu, who is widely credited for developing Hyderabad into a tech hub, will start large infrastructure projects, attract investors and turn the state into an electronics manufacturing hub.

All south-based companies related to cements and road infrastructure, with a presence in Andhra, are on top of Dalal Street's radar.

"It is expected that Naidu's dream project of Amravati will be revived now. He has already announced that Amravati would be the sole capital of Andhra Pradesh. So Amravati can become a big theme as new buildings, roads, highways and other infrastructure is built. Cement can also be a big proxy play to this development," Raghav Wadhwa of Samar Wealth said.

The revival of Rs 40,000 crore Amravati project, the state's dream capital, may also spark a realty boom. On top of TDP's agenda is also the completion of the Rs 47,000 crore Polavaram irrigation project.

The street is factoring in demand revival for southern players, especially companies having exposure to Andhra Pradesh, as the government may boost prospects of the state development plan.

Sagar Cements, KCP, and NCL Industries have around 80% capacity based in Andhra, whereas Ramco Cements has 30% capacity in the region. Emkay Global analysts expect these stocks to continue momentum in the near term.

On the other hand, BSE PSU index has not yet fully recovered from the 16% shock it received on election result day. On Thursday, the index closed at 21,227, 6% lower than June 3 closing of 22,491. Going purely by stock prices, Naidu 4.0 is one step ahead of Modi 3.0 for now.

(Data: Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)