National Monetisation Pipeline may give a boost to infra projects; these sectors, stocks to benefit the most

The government’s ambitious National Monetisation Pipeline (NMP) scheme that aims to monetise assets worth Rs 6 lakh crore between 2021-22 and 2024-25 will likely benefit economy and infra-centric sectors, analysts have said.

Assets from various sectors, including railways, roads, aviation, telecom and power transmission, will be monetised in this four-year leasing programme and funds invested in new infrastructure projects, Finance Minister Nirmala Sitharaman said while unveiling NMP on August 23.

"Fifteen railway stadiums, 25 airports and the stake of the Central government in existing airports and 160 coal mining projects will be up for monetisation," NITI Aayog CEO Amitabh Kant said.

The move is expected to shore up economic growth with the focus firmly on infrastructure, which will also generate employment at a time when the coronavirus has left scores of people jobless.

In his Independence Day speech, Prime Minister Narendra Modi had announced a Rs 100-lakh-crore "Pradhan Mantri Gatishakti" initiative for holistic infrastructure growth.

Also read: Govt to monetise 25 airports over 4 years under NMP plan, to fetch Rs 20,782 crore

Sectors & stocks that stand to gain

Economy and infracentric sectors are likely to gain from the NMP scheme, analysts said.

Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities, said that among asset classes, the top five—roads, railways, power, oil and gas pipelines and telecom—account for 83 percent of the pipeline value.

Multiple sectors will benefit from the government's move, provided key issues are addressed.

"For India to bridge its massive infrastructure deficit, it needs to create enabling conditions for attracting long-term capital. These include addressing key issues including pricing of services and effective contract
and dispute-resolution mechanisms," Chouhan said.

Also read: Explained: All you need know about the government plan to monetise urban real estate assets under NMP

If these issues are resolved, then multiple sectors will get benefited. Power generation companies and road Infra companies could benefit the most," said Chouhan.

Ajit Mishra, VP-Research, Religare Broking, was of the view that the monetisation plan will boost infrastructure development as well as bring in private sector investment.

The government's assets will be utilised under the public-private route and also push new technology (digitalisation) and innovation, said Mishra.

Also read: National Monetisation Pipeline: Urban real estate, warehousing and stadiums in Rs 6 lakh crore programme

Sectors such as infrastructure (road, railway, airports, etc), mining, gas, telecom and power will be the key beneficiaries, he said.

Among stocks, Mishra sees government-owned companies such as Power Grid, NTPC, NHPC, NLC, GAIL, IOC and HPCL making gains.

Also read: Govt eyes over Rs 45,000 crore from monetisation of power transmission assets by FY25

Gaurav Garg, Head of Research of CapitalVia Global Research, said NMP will trigger some value generation in under-utilised resources.

"The sectors that are likely to benefit are ports, airports and railways. Other infrastructure-related sectors might also get benefited, particularly gas and its product pipeline, power generation and transmission," said Garg.

Housing is another sector where the scheme might have a positive influence. There are many under-utilised resources in housing, power and infra space which may see value generation, he said.

Garg said gas distribution stocks like Linde India, Adani Total Gas, MGL and IGL may do well due.

"Some of the infra related stocks which include HUDCO, NBCC, NCC might turn out to better opportunity to invest in as it might get benefit from this scheme. Power generation in the hydel and solar sector in PSEs might do well in long term, however, it might take time but structurally boost sentiments," said Garg.

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