Short Call | Is BJP's thumping Maharashtra win the elixir that PSUs needed? Astral, Dixon Tech in focus

Short Call

The BJP's resounding win in Maharashtra came as a glimmer of fresh air for the equity markets, shaking off the lull caused by muted Q2 earnings. The landslide victory not only ends years of political instability in India’s most industrialised state but also signals a continuation of BJP's policies, consolidating power between the centre and state, as noted by MOFSL.

In the stock market, public sector undertakings (PSUs) stole the spotlight, rebounding sharply after recent months of correction as investors bet big on government-led capex revival. With the elections behind, analysts predict a shift in focus toward unblocking stalled infrastructure projects and boosting spending—a lifeline for sectors like urban development and manufacturing, highlighted Kotak Institutional Equities.

But here’s the twist: while the PSU pack has rallied on renewed hopes, the needle might not move much for all players just yet. Even though sectors like capital goods, construction, and realty are gearing up for a sentiment boost, darlings of the past—like defence and railways—may not find their glory days just around the corner. The bone in their neck being sky-high valuations that still run ahead of fundamentals, leaving investors chewing over whether the risk-reward is worth it.

For now, it’s cautious cheer—some sectors are poised for a turnaround while others might need more than just a BJP win to reignite their spark.

Dixon Technologies (Rs 15,711, +2.4%)

Shares gained after Motilal Oswal Financial Services said that improved wallet share, new segment additions, and backward integration would drive growth.

Bull Case: Beyond FY27 consolidated revenue is likely to grow at 16 percent CAGR driven by new client additions in mobile through the Longcheer partnership, increasing wallet share with existing clients to 30-40 percent, and a shift towards premium mobiles. Segments such as IT hardware, telecom, wearable, and hearable to gain scale and contribute to incremental revenues.

Bear Case: Slower-than-expected market growth and loss of key client relationships could pose risk. Increased competition could pressure margins and market share.

Astral (Rs 1,789.55, +2%)

Goldman Sachs reiterated “buy” but trimmed its target price on the pipes player.

Bull Case: As the industry leader, Astral is currently exhibiting pricing power and margin discipline, said the brokerage. China PVC prices remain subdued, which points to a more gradual margin recovery for the pipes sector.

Bear Case: The pipes sector is seeing an impact on volumes a result of extended monsoons and sharp fall in PVC prices, which has also led to dealer destocking.

(Inputs from Neeshita and Zoya)