Top 5 Largecap Stocks that Could Skyrocket in Modi's Next 5 Years

Elections are right around the corner and investors are already projecting the current governing party could come back to power for the next term.

During the previous two terms of the Modi-led government, India witnessed a MASSIVE surge in capex, which boosted the Indian economy along with investor sentiment.

Many companies have not only benefitted from this capex cycle but also the policies drafted by the government towards making India a manufacturing hub.

Although several largecap companies could possibly gain if Modi were to be re-elected, our research indicates these five largecap companies could emerge as primary beneficiaries.

We have shortlisted these stocks using the Equitymaster stock screener.

#1 Tube Investments of India

First on the list is Tube Investments of India, the largest manufacturer of cold drawn welded steel tubes in India.

The company is engaged in manufacturing engineering and metal products such as cold rolled strips, precision steel tubes, automotive and industrial chains, and roll-formed car door frames.

It is also the second largest bicycles manufacturer in India with a 26% market share and sells them under the brands BSA, Hercules and Montra.

Through its subsidiary CG Power, the company also has a presence in the gears business and is also one of the top gear manufacturers in India.

With its diversified portfolio, the company caters to various segments including automotive, railways, construction, mining, and agriculture.

In the last five years, the company has scaled to new heights on account of growth across all its business segments.

The company's revenue has grown at a compound annual growth rate (CAGR) of 21% on account of high growth in volumes driven by high demand. The net profit has also grown at a CAGR of 35.8% during the same period.

A healthy financial performance has taken its shares up over 900% in the last five years.

To continue this momentum, the company has lined up several plans.

It has started catering to the healthcare industry with its existing products and is also working on developing new products.

Recently, Tube Investments of India ventured into e-mobility and is manufacturing e-three wheelers and e-trucks. Both the products are well received in all the four states it launched. It plans to now expand to other states with these products.

The company is also planning to launch e-trucks and e-small commercial vehicles in the financial year 2025.

Through its subsidiary, CG Power, the company announced a foray into semiconductor testing and assembly, which is expected to be operationalised by the financial year 2026.

The company plans to invest around Rs 20 billion (bn) in capex each year for the next few years to commercialise all its growth plans.

Given the company's strong cashflows, it plans to maintain its debt-free status despite investing heavily in capex.

With investments across several high-growth businesses, Tube Investments of India is all set to thrive in the next five years.

To know more, checkout Tube Investments of India's financial factsheet and latest quarterly results.

Tube Investments of India Financials (2018-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue (Rs m)	58,267	48,127	61,514	1,25,519	1,51,080
Revenue Growth (%)		-17.40%	27.80%	104.00%	20.40%
Net Profit (Rs m)	2,508	3,133	2,857	9,676	11,584
Net Profit Margin (%)	4.30%	6.60%	4.70%	7.80%	7.70%
Return on Equity (RoE)	17.10%	18.20%	12.40%	31.60%	29.40%
Return on Capital Employed (RoCE)	27.30%	25.10%	12.90%	36.00%	41.20%

Data Source: Equitymaster

#2 Siemens

Second on the list is Siemens.

The company offers integrated products, services, and solutions to energy, manufacturing, and process industries.

It is present across the value of chain of power, oil and gas, railways, and engineering procurement and construction (EPC) companies.

Over the years, the company has grown organically and inorganically through acquisitions.

Over the last five years, the company has witnessed strong growth across all its user industries, which has driven its revenue and profits.

The company's revenue and net profit have grown at a CAGR of 8.2% and 11.6%, respectively, in the last five years. The net margin also improved from 8.7% to 10% despite high inflation. As a result, the RoE and RoCE also expanded.

Shares of the company have given over 300% return in the last five years, mirroring its strong financial performance.

Siemens India strongly benefits from the technical support and know-how it receives from its parent company, Siemens AG.

Its access to the latest technology, diversified product portfolio, wide geographical reach, and strong demand from user industries will drive the company's performance in the medium term.

To know more, checkout Siemen's financial factsheet and latest quarterly results.

Siemens Financials (2018-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue (Rs m)	1,35,896	1,02,808	1,34,895	1,64,555	2,01,163
Revenue Growth (%)		-24.30%	31.20%	22.00%	22.20%
Net Profit (Rs m)	11,356	7,695	10,298	12,619	19,619
Net Profit Margin (%)	8.70%	7.70%	7.80%	7.80%	10.00%
Return on Equity (RoE)	12.50%	8.10%	10.00%	10.90%	15.00%
Return on Capital Employed (RoCE)	19.40%	11.60%	14.00%	15.30%	20.60%

Data Source: Equitymaster

#3 Varun Beverages

Third on the list is Varun Beverages.

The company is the largest franchisee of PepsiCo in the world.

It manufactures and distributes a wide range of carbonated and non-carbonated drinks, which are sold under the PepsiCo trademark.

Being a part of RJ Corporation, the largest franchisee of Pizza Hut, KFC, and Costa Coffee in India, it has a robust distribution network covering urban, semi-urban, and rural markets.

In the last five years, Varun Beverages has experienced strong demand, which has helped the company double its revenue and grow at a CAGR of 17.6%.

The net profit has also grown at a healthy rate of 34.8%, driven by the company's backward integration of most of its operations. Its net margin consistently improved over the last five years, which led to expansion of its RoE and RoCE.

At the end of the financial year 2023, the RoE and RoCE of the company stood at 30.3% and 30%, respectively.

In the last five years, shares of Varun Beverages have surged over 900%.

The company has been witnessing strong demand from consumers over the last few years. To cater to this demand, it is investing in setting up new manufacturing facilities across three locations. It is also expanding its capacity at existing plants.

Even with a planned capex of over Rs 70 bn, the company has managed to reduce its debt-to-equity ratio in the last five years.

Apart from capacity expansion, it is concentrating on new product development to widen its non-carbonated drinks portfolio by adding juice-based and dairy-based drinks.

To know more, checkout Varun Beverages' financial factsheet and latest quarterly results.

Varun Beverages Financials (2018-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue (Rs m)	70,532	63,815	87,564	1,29,946	1,58,435
Revenue Growth (%)		-9.50%	37.20%	48.40%	21.90%
Net Profit (Rs m)	4,722	3,573	7,461	15,501	21,018
Net Profit Margin (%)	6.70%	5.60%	8.60%	12.00%	13.30%
Return on Equity (RoE)	14.20%	10.10%	18.30%	30.40%	30.30%
Return on Capital Employed (RoCE)	18.00%	11.90%	20.60%	32.60%	30.00%

Data Source: Equitymaster

#4 Trent

Next on the list is Trent.

Part of the Tata Group, Trent is engaged in the retailing of apparel, footwear, accessories, toys, and games.

It operates over 780 stores under various retail concepts such as Westside, Zudio, Landmark, and Star across 155 cities in India.

Strong demand and rapid expansion have helped the company grow its revenue at a CAGR of 26.3% in the last five years. The net profit also grew at a CAGR of 32.9% during the same period.

Trent's performance on the bourses was also strong as shares have soared over 900% in the last five years.

The company plans to invest around Rs 8 bn in capex to expand its operations and increase its physical stores across all retail concepts across the country.

This, along with the high demand for apparel and footwear, drives the company's performance in the medium term.

To know more, checkout Trent's financial factsheet and latest quarterly results.

Trent Financials (2018-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue (Rs m)	24,323	33,320	25,560	42,789	78,161
Revenue Growth (%)		37.00%	-23.30%	67.40%	82.70%
Net Profit (Rs m)	948	1,060	-1,811	346	3,937
Net Profit Margin (%)	4.00%	3.30%	-7.70%	0.80%	5.20%
Return on Equity (RoE)	5.80%	4.40%	-7.80%	1.50%	15.20%
Return on Capital Employed (RoCE)	11.30%	15.90%	2.40%	15.20%	31.10%

Data Source: Equitymaster

#5 Tata Power

Last on the list is another Tata company, Tata Power.

The company is involved in the generation, transmission, and distribution of electricity.

It also manufactures solar roofs and installs electric vehicle (EV) charging stations across the country.

The company has an installed capacity of 14.4 gigawatts (GW), which is dominated by thermal (61%), followed by solar, hydro, wind, and waste heat recovery.

Over the last few years, the company has concentrated on reducing its thermal capacity and increasing its renewable energy capacity.

In 2019, the company's renewable energy capacity was just 2.5 GW, and today is around 5.6 GW.

The primary reason behind increasing its renewable energy portfolio is to achieve 70% clean and green energy production by 2030 and complete carbon neutrality by 2040.

In line with this mission, the company has announced a Rs 700 bn green energy plan to install 10 GW of solar and wind power capacity in the next five to seven years.

It also plans to install over 1 lakh charging stations by 2025.

Given the growing demand for power, and the growing share of renewable energy in its portfolio, the company's witnessed a strong growth in its revenue and profit.

The revenue and net profit have grown at a CAGR of 13.3% and 6.9% respectively in the last five years.

The stock market also cheered the company's financial performance and its growth plans.

Given the government's renewable energy target and the company's plans to become carbon neutral, Tata Power is poised for growth in the medium term.

To know more, checkout Tata Power's financial factsheet and latest quarterly results.

Tata Power Financials (2018-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue (Rs m)	3,02,997	2,97,221	3,31,426	4,37,819	5,65,773
Revenue Growth (%)		-1.90%	11.50%	32.10%	29.20%
Net Profit (Rs m)	27,315	17,267	14,849	26,234	38,097
Net Profit Margin (%)	9.10%	5.90%	4.50%	6.10%	6.90%
Return on Equity (RoE)	16.30%	9.60%	7.10%	11.70%	13.20%
Return on Capital Employed (RoCE)	16.20%	13.10%	11.50%	12.40%	16.50%

Data Source: Equitymaster

Snapshot of Best Largecap Stocks on Equitymaster Stock Screener

Here's a table comparing these companies on various important parameters -

Data Source: Equitymaster

Please note, these parameters can be changed accordingly.

Equitymaster's powerful Stock Screener allows you to screen Indian stocks based on both pre-set and your own criteria.

In Conclusion

Favourable government policies and high demand could possibly further fuel the growth for these companies.

However, it is important to remember that past performance doesn't guarantee future returns.

Hence you must treat these five stocks with the caution as other stocks. Do a thorough research before choosing stocks for your portfolio.

Remember, invest for the long term to maximise your returns and reduce the impact of market volatility on your portfolio.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...