Market Overview

3 India Stocks That Have Rallied Since The Elections

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Since the results of the general election were announced, India-based stocks traded on U.S. exchanges ICICI Bank (NYSE: IBN), MakeMyTrip (NASDAQ: MMYT) and Sesa Sterlite (NYSE: SSLT) have seen the biggest boosts.

This was the first general election in India since 2009, and more than 814 million people were eligible to vote, making it the largest election in the world. It turned out to be the worst defeat of a sitting government in India since independence. Narendra Modi, who is seen as pro-business, will be the next prime minister, and the Bharatiya Janata Party won a sweeping victory, taking 336 seats in parliament.

Below is a quick look at how ICICI Bank, MakeMyTrip and Sesa Sterlite have fared and what analysts expect from them.

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ICICI Bank

The economic reforms anticipated from the new government have provided a boost to India's financial institutions. ICICI Bank is one such institution, which has a market cap of around $29 billion and a dividend yield near 1.5 percent. The long-term earnings per share (EPS) growth forecast is about 22 percent.

The short interest in Mumbai-based ICICI Bank was less than one percent of the float at the most recent settlement date. That was the second lowest number of shares sold short so far this year. The days to cover is about three.

The one analyst surveyed by Thomson/First Call has a Strong Buy rating on the stock and a price target for the next year of $61.60. A move to that price target would be a gain of more than 16 percent for shareholders. Shares last traded at that level back in 2008.

Shares pulled back more than six percent between the end of voting and when the results were announced, but then they rose to a new multi-year high the week of May 19. They are up more than 42 percent year to date. The stock has outperformed competitor HDFC Bank over the past six months.

Related: Indian ETFs Rally On Election Victory (EPI, INDY, INDA, SCIF, SMIN)

MakeMyTrip

This online travel company reported fiscal fourth-quarter results the week of May 19 that included a 30 percent jump in revenue from a year ago, and a boost to revenue guidance for the current fiscal year. It sports a market capitalization of about $1 billion. But the company's return on equity and operating margin are in the red.

The number of shares sold short in this Gurgaon-based company was less than one percent of the total float at the end of April. That was the lowest level of short interest since January. At the current average daily volume, it would take more than three days to close out all short positions.

Thomson/First Call lists no analyst recommendations or mean price target. But Oppenheimer recently upgraded its rating from Perform to Outperform, reversing its downgrade from back in February, and Citigroup initiated coverage with a Buy rating and a price target of $27.

Shares ended the week of May 19 at $27.02, more than 29 percent higher than when the election results were released, and up more than 36 percent year to date. Over the past six months, the stock has outperformed competitors Expedia and Orbtiz Worldwide, as well as the broader markets.

Sesa Sterlite

This Panaji-based miner, producer and exporter of iron ore recently reported strong fourth-quarter and fiscal year results, after the completion last year's of its merger. It has a market cap of more than $13 billion and a dividend yield of about 1.4 percent. Its long-term EPS growth forecast is about 14 percent, and its price-to-earnings (P/E) ratio is less than that of larger competitor Rio Tinto.

Despite increasing by more than 10 percent in the most recent period, the number of shares sold short represented much less than one percent of the total number of U.S.-traded shares available. It would take more than three days to cover all short positions. Short interest is about half of what it was last July, ahead of the merger.

Here too, Thomson/First Call lists no analyst recommendations or mean price target.

The share price is more than 26 percent higher than when the election results were announced. It is also up almost 44 percent since the beginning of the year, ending the week of May 19 near the new multi-year high. The stock has outperformed not only the broader markets over the past six months, but larger competitors BHP Billiton and Rio Tinto as well.

At the time of this writing, the author had no position in the mentioned equities.

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Posted-In: BHP Billiton Expedia HDFC BankEmerging Markets Politics Markets Trading Ideas General Best of Benzinga

 

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