India –- one of the fastest growing economy of the world and politically the largest democratic country of the world –- is headed for parliamentary election during April – May 2019. Apart from the political implications of this election, the most important fact is that this event is likely to become the most-expensive election worldwide.
Despite the fact that it is an India election, especially concerning its people and political outfits, a few U.S. corporates are likely to gain significantly from this mega event, which according to some political analysts is the greatest show on the earth.
World’s Most-Expensive Election
According to New Delhi-based Centre for Media Studies, which tracks money flow in Indian elections, the 2019 parliamentary election will cost around $7 billion, unprecedented in the world. As per Opensectrets.org, which tracks money in the U.S. elections, total expenditure for 2016 U.S. presidential election was $6.5 billion.
Per Centre for Media Studies, nearly 50% of the estimated $7 billion expenditure in 2019 Indian election will be spend on social networking, advertising (especially online advertising) and traveling and transportation.
Growing Tech Momentum in India
India has the second-largest population after China with more than 1.2 billion population. Out of this, nearly 900 million individuals are eligible for casting mandate in 2019 election. Around 70% of the country’s population is below the age of 35 and extremely tech savvy.
Currently, India is home to a young and tech savvy population, which represents strong growth prospects for tech majors. These millennials are the key drivers of growth for Internet-based applications, e-commerce and mobile-transaction related software. The millennials have a strong appetite for new technologies. As this group will comprise 75% of the workforce by 2025, India will surely emerge as a long-term investment bet for tech giants.
Economic Momentum to Continue
The World Bank has projected that India’s economy will grow by 7.3% for fiscal 2018-2019 (India’s fiscal year starts in April and ends in March of the next year) and 7.5% for fiscal 2019-2020. The IMF estimated that India will grow by 7.2% in fiscal 2018-2019, 7.5% in 2019-2020 and 7.7% in 2020-2021.
The Moody’s Investor Services forecast India’s GDP growth at 7.2% for 2018-2019 and 7.4% for 2019-2020. Moody’s was optimistic that structural reforms undertaken by the Modi administration are likely to boost growth and reduce the debt burden. Moody’s lifted India’s rating to Baa2 from Baa3 and changed its rating outlook to stable from positive as “risks to its credit profile were broadly balance”.
Four Stocks to Watch
We have been able to narrow down to four stocks each of which currently carries a Zacks Rank #3 (Hold) but are poised to gain significantly from the upcoming election in India. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Facebook Inc. FB: India is the largest overseas market for Facebook. The flagship Facebook social networking site and WhatsApp messaging platform are immensely popular in India. The company serves 300 million users in Facebook and another 200 million users in WhatsApp. Instagram now boasts 400 million daily users. Almost all political parties and political leaders have Facebook page in India.
The stock has surged 23.2% year to date. The Zacks Consensus Estimate for the current year has improved 2.2% over the last 60 days. The stock has provided an average positive earnings surprise of 13.5% in the last four reported quarters.
Twitter Inc. TWTR: The microblogging site is expected to serve more than 100 million users in India by 2019. Indian Prime Minister Narendra Modi has more than 46 million Twitter followers and opposition leader Rahul Gandhi has over 10 million Twitter followers.
The stock has gained 8.8% year to date. The Zacks Consensus Estimate for the current year has improved 2.4% over the last 60 days. The stock has provided an average positive earnings surprise of 26.8% in the last four reported quarters.
Alphabet Inc. GOOGL: The company’s flagship Google search engine, Google Earth and Youtube are the most-preferred Internet-based platforms for Indian millennials. At present, India has more than 560 Internet-users, almost all of whom use Alphabet’s online sites. As per the company’s own study, India is adding 10 million active users per months, nearly all of whom are using Google sites.
The stock has climbed 15% year to date. The Zacks Consensus Estimate for the current year has improved 0.1% over the last 60 days. The stock has provided an average positive earnings surprise of 17.8% in the last four reported quarters.
Snap Inc. SNAP: The company’s flagship Snapchat online platform is gradually gaining ground in India. Snapchat now boasts around 191 million daily users in India. The company has formed partnership with a number of Indian online content providers to make its platform more attractive.
The stock has jumped 92.9% year to date. The Zacks Consensus Estimate for the current year has improved 14.7% over the last 60 days. The stock has provided an average positive earnings surprise of 20.5% in the last four reported quarters.
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