We are not in 1955. Inspector Raj has to be thrown out. We need private-sector competition
The reform by NAMO and Nirmala Sitharaman of deregulating the prices of essential commodities and opening the Agriculture Produce Market Committee (APMC) to competition has been welcomed by noted experts.
Ashok Gulati, a respected agriculture scientist and authority on the subject, did not mince any words in welcoming the reform.
“That’s a big-ticket item. All of the last three reforms are bigger than the first eight points. It was completely positive. Congratulations, kudos to but you should have done it in the first year of Modi 1.0. We’ve done now. It’s a corona gift,” he said.
He explained that the permission to farmers to sell their product across India will make farming more competitive and attract large and deep-pocketed players like Reliance and Adani into the sector.
“The government doesn’t need to do anything. A lot has changed. The private sector will come forward and will fight over it. Reliance, Adani and all the others will figure it out. They will pump in the money. You have to change the law, there is ample interest in the private sector,” he said.
Ashok Gulati also slammed the leftists and communists who are still clamoring for the Inspector Raj.
“We are not in 1955. Enforcement is exactly what we don’t want. Inspector Raj has to be thrown out of the window. What you need is private-sector competition. These are all useless topics of discussion. All nonsense. They have an unnecessary stronghold on India as though we’re living in the pre-Independence era,” he thundered.
There cannot be a stronger endorsement of the agriculture reforms announced yesterday than this. Dr Ashok Gulati is India’s foremost expert on the agriculture sector, he really knows how it works.https://t.co/HujVwyN9K6
— Rajeev Mantri (@RMantri) May 16, 2020
Excellent way of explanation which anyone can appreciate. The best one is…. Today farmer gets 30% of what the consumer pays for vegetables. If we can make it 60% it would be a great achievement. Today 70% is eaten up by ahratiyas, buyer, retailer, transporter oops
— Deba Pratim Ghatak, CA (@debudpg) May 16, 2020
It is notable that some progressive States like Karnataka have already implemented the reform, which shows that it was eagerly awaited.
Karnataka hits the ground running!! https://t.co/JqFlGuOZd9
— Pradeep Pandya (@pandyapradeep) May 16, 2020
Obviously, all the top-notch Agri stocks like Coromandel International, Kaveri Seeds, Nath Bio etc will have to be in our buy list.
Opening up the Defense sector creates new opportunities
The Defense sector has so far been a Holy Cow in which private participation is highly restricted.
However, the decision to reduce Governmental control over this sector augers well for investors.
The FDI limit through the automatic route has been increased to 74%.
In addition, several items have been placed in the negative-import list which means that the ‘Make in India’ credo will get a boost and domestic manufacturers will prosper.
Anil Singhvi, the charismatic editor of Zee Business, described the decision as “BIG” and as requiring “HUGE POLITICAL WILLPOWER“.
My biggest take away from today’s FM PC
Govt ready to reduce control on politically sensitive n tightly hold sectors Coal, Defence, Space, Atomic Energy
It’s BIG n requires HUGE POLITICAL WILLPOWER?@ZeeBusiness @nsitharaman @ianuragthakur @FinMinIndia @PMOIndia @narendramodi
— Anil Singhvi Zee Business (@AnilSinghvi_) May 16, 2020
He also explained the nuances of the reforms with utmost clarity.
वित्त मंत्री निर्मला सीतारमण के ऐलान रिफॉर्म के दिशा में कितने हैं अहम? जानिए अनिल सिंघवी से@AnilSinghvi_ @nsitharaman @ianuragthakur @FinMinIndia #EconomicPackage pic.twitter.com/XzUBQpRmZN
— Zee Business (@ZeeBusiness) May 16, 2020
Maj. Gen. (R.) Shashi Asthana, a noted Defense & Strategic Analyst, opined that the major reforms for the defense sector can prove to be a game changer and make India self-reliant.
#StimulusPart6 | The major reforms announced today for the defense sector can prove to be a game changer and make India self-reliant: Maj. Gen. (R.) Shashi Asthana, Defense & Strategic Analyst speaks to NewsX pic.twitter.com/AChuGY4WJs
— NewsX (@NewsX) May 16, 2020
Best Defense stocks to buy now
Sanjiv Bhasin has recommended three blue-chip stocks which will prosper from the latest reforms.
These are Bharat Electronics (BEL), Larsen & Tuobro (L&T) and Bharat Forge.
Big break in defense & listing of ordinance companies.. top picks @ bel L&t Bharat forge ??
— sanjiv (@sanjiv_bhasin) May 16, 2020
Bharat Electronics, the top-notch PSU, is the obvious choice for all investors looking for a toe-hold in the Defense sector.
It is a Navaratna enterprise with 37% market share in Indian Defense Electronics.
Its core capabilities are in radar & weapons systems, defense communication & electronic warfare.
According to Motilal Oswal, BEL is “the best play in the Indian defense sector” as it has excellent execution capability.
BEL ended FY20 with a record turnover of over INR125b (+6% YoY) which could have been higher had it not been for the COVID-19 outbreak and the economic slowdown, which caused cancellation of some contracts due to force majeure.
It is notable that BEL offers a hefty dividend yield of 5%, which will protect us on the downside.
Geojit has also recommended the stock on the following logic:
“Currently BEL is trading at 1 year forward at P/E of 8x which is at 38% discount of historical average of 13x. Given strong balance sheet, RoE~20% and dividend yield of 5.4%, it seems attractive, given strong earnings visibility.”
L&T and Bharat Forge need no introduction to us. These are the ideal blue-chip all-weather stocks that we can buy and forget!
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