Trump's Victory Could Boost These 5 Indian Stocks

With the return of former US President Donald Trump to the White House, Indian markets, although down today, showed optimism yesterday.

Technology stocks have led a rally amid hopes that Trump's pro-business stance could energize the US economy, boosting global trade and investment flows.

Indian benchmark indices tracked gains in global markets, each climbing over 1% on speculation of Trump's victory, with investors adding trillions to their wealth as the Nifty surged, largely driven by IT giants.

This rally reflects confidence in Trump's economic policies, expected to spark spending and growth in the world's largest economy, especially benefiting sectors like technology and electronic manufacturing.

Against this backdrop, here's a look at five stocks in India that are positioned to capitalize on renewed US growth and trade under Trump's leadership.

#1 Kaynes Technology

First on the list is Kaynes Technology.

Kaynes Technology stands poised to benefit from Donald Trump presidency, as his pro-India and anti-China stance aligns well with the company's strengths in electronics manufacturing.

The victory could intensify the China+1 strategy, which encourages global companies to diversify supply chains away from China and into countries like India.

As an established electronics manufacturing leader in India, Kaynes Technology is strategically positioned to capture this redirected demand, especially in the Electronic Manufacturing Services (EMS) space.

As an end-to-end, IoT solutions-enabled electronics manufacturing company, Kaynes has built a robust foundation in Electronic System Design and Manufacturing (ESDM) services.

Its expertise spans automotive, industrial, aerospace and defence, IoT, and IT industries, giving it a broad reach into sectors likely to grow under a Trump administration that promotes "America First" policies with a preference for partnerships outside China.

The company can readily scale production in high-demand areas like smart meters, consumer electronics, and even aerospace, effectively meeting the demands of a potentially expanded client base.

Kaynes Technology's substantial order book - more than Rs 30 billion, set for execution over the next 18-20 months - underlines its growth trajectory and operational capacity.

This backlog not only provides revenue visibility but also positions the company as a key player in addressing global demand shifts.

Kaynes' strong engineering team and innovative product offerings further strengthen its ability to scale and adapt to any uptick in demand fuelled by geopolitical shifts under Trump

Kaynes Technology's Financial Snapshot (FY20-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	1.1	14.2	67.9	59.4	60.3
Operating Profit Margin (%)	0.1	0.1	0.1	0.2	0.2
Net Profit Margin (%)	2.5	2.3	5.9	8.5	10.2
Return on Equity (%)	9.1	7.0	20.6	9.9	7.4
Return on Capital Employed (%)	32.0	23.1	37.1	16.7	11.5

Source: Equitymaster

Kaynes Technology's revenue grew at a CAGR of 37.7% from FY20 to FY24, while net profit grew at 79.9%.

Despite this, the company maintained strong financial health, with an average RoE of 10.8% and RoCE of 24.1%.

With China+1 strategies gaining momentum, Kaynes' expertise in advanced IoT solutions and electronics manufacturing could attract new clients who are looking for reliable partners in India.

This potential influx of demand could accelerate its revenue and market footprint, aligning Kaynes for substantial growth in the event of Trump's re-election.

For more details, see the Kaynes Technology company fact sheet and quarterly results.

#2 Dixon Technologies

Next on the list is Dixon Technologies.

Dixon Technologies is a leader in the Electronic Manufacturing Services (EMS) industry since its founding in 1993.

It's well-positioned to gain from a Trump presidency, thanks to its robust presence in India's electronics manufacturing sector and its strategic focus on semiconductors and electronics.

The company's diversified portfolio includes products ranging from consumer electronics and home appliances to mobile phones, CCTVs, and LED TV screens.

Dixon is the largest manufacturer of LED TV screens in India and partners with major global brands such as Samsung, Xiaomi, Panasonic, OnePlus, Philips, and Havells, solidifying its foothold in the rapidly expanding electronics market.

A Trump victory could spur further shifts in global supply chains, particularly in light of his previous promise to raise tariffs on Chinese imports by 60%.

This move would incentivise many companies to look for alternative manufacturing bases outside China, and India stands to benefit greatly from this geopolitical shift.

As a leading EMS player in India, Dixon Technologies is well-equipped to capture this increased demand for cost-effective and high-quality manufacturing alternatives.

The growing preference for "China+1" strategies, aimed at diversifying supply chains, would push more companies to seek out reliable manufacturers in India, and Dixon's established manufacturing capabilities make it a prime beneficiary of this trend.

Dixon Technology's Financial Snapshot (FY20-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	47.4	46.5	65.9	14.0	45.1
Operating Profit Margin (%)	0.1	0.0	0.0	0.0	0.0
Net Profit Margin (%)	2.7	2.5	1.8	2.1	2.1
Return on Equity (%)	22.4	21.9	19.3	20.1	22.4
Return on Capital Employed (%)	35.8	30.9	23.7	28.9	32.1

Source: Equitymaster

The revenue and net profit have grown at a 5-year CAGR of 42.8% and 42.7%, respectively. This robust growth has led to a strong RoCE and RoE averaging 21.2% and 30.3% over the last 5 years.

Additionally, Dixon Technologies has significantly benefited from the Indian government's Production Linked Incentive (PLI) scheme, which supports the electronics sector and aims to increase domestic manufacturing in the country.

The company has partnerships with global players such as the Japanese company Rexxam for manufacturing Printed Circuit Boards (PCBs) and is building a new facility in Noida to produce 1.3 million laptops for Taiwanese PC maker Acer.

Its focus on semiconductors, coupled with its capabilities in assembly and product development, places Dixon in a prime position to capitalise on the growing global demand for electronics.

For more details, see the Dixon Technologies company fact sheet and quarterly results.

#3 TCS

Next on the list is TCS.

With a strong global presence and a diverse portfolio, TCS is a market leader in multiple verticals, including consulting, service integration, and application services.

In 2018, it became the first company on the Bombay Stock Exchange (BSE) to reach a US$ 100 billion market cap.

TCS has deep domain expertise across various industries such as financial services, consumer business, healthcare, manufacturing, and technology. The company is also known for its diversified client base and leadership in IT outsourcing services.

The return of Trump to the White House could significantly benefit TCS, particularly through the expansion of Global Capability Centers (GCC) in India. Trump's policies, such as revoking China's Most Favoured Nation (MFN) status, may lead to increased outsourcing to India, driving demand for IT services.

Furthermore, Trump's expansionary fiscal policies, including a proposed cut in corporate tax rates from 21% to 15% for domestic production, could boost demand for IT services.

These policies would ease budgetary pressures on US companies, potentially leading to greater investments in digital transformation, which is a core service offering of TCS.

As a result, TCS is well-positioned to leverage these policy shifts for growth in the coming years.

TCS Financial Snapshot (FY20-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	7.2	4.6	16.8	17.6	6.8
Operating Profit Margin (%)	0.3	0.3	0.3	0.3	0.3
Net Profit Margin (%)	20.7	19.8	20.1	18.8	19.1
Return on Equity (%)	38.6	37.7	43.1	46.8	50.9
Return on Capital Employed (%)	51.3	51.4	58.9	63.8	69.4

Source: Equitymaster

Fron FY20-24 TCS's revenue and net profit has compounded at a compound annual growth rate (CAGR) of 10.5% and 7.9% respectively.

It has been delivering strong return, with the RoE and RoCE averaging at a healthy 43.4% and 58.9%, respectively.

Going ahead, management expects FY25 to be better in terms of revenue and profitability.

For more details, see the TCS company fact sheet and quarterly results.

#4 Infosys

Next on the list is Infosys.

Infosys Ltd is the 2^nd largest information technology company in India.

The company provides consulting, technology, outsourcing and next-generation digital services to enable clients to execute strategies for their digital transformation.

Infosys is renowned for its high-quality digital services, which account for 57% of its revenues, while the remaining 43% comes from traditional services.

With a solid portfolio of Fortune 500 clients, including major names like ICICI Bank, Daimler, HSBC, Goldman Sachs, and Lockheed Martin, Infosys has established itself as a global leader in IT services.

As with other IT companies, Infosys stands to benefit from Trump's policies, particularly in the areas of outsourcing and digital transformation. Trump's stance on reducing corporate tax rates and reshaping global supply chains could increase demand for IT services from companies looking to reduce operational costs and streamline their processes.

Additionally, the potential for increased outsourcing to India as a result of Trump's policies may lead to higher revenue streams for Infosys, especially from its digital services division.

With its deep relationships with key global players, Infosys is well-equipped to benefit from any surge in demand for digital and IT services following the US election results.

Infosys' Financial Snapshot (FY20-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	9.8	10.7	21.1	20.7	4.7
Operating Profit Margin (%)	0.3	0.3	0.3	0.3	0.3
Net Profit Margin (%)	18.3	19.3	18.2	16.4	17.1
Return on Equity (%)	25.5	25.6	29.6	32.3	30.1
Return on Capital Employed (%)	34.0	35.3	40.6	45.1	41.8

Source: Equitymaster

Between FY20 and FY24, Infosys' revenue and net profit have surged with an impressive CAGR of 13.2% and 11.2%, respectively.

The company has shown consistent financial strength, boasting an average RoE of 28.6% and RoCE of 39.4%.

For FY25 the company has guided for a 1-3% revenue growth in constant currency terms.

The company expects growth to accelerate in financial services and telecom verticals due to large deal wins. Infosys also has a positive outlook on the European markets.

For more details, see the Infosys company fact sheet and quarterly results.

#5 Syrma SGS Technology

Last on the list is Syrma SGS Technologies.

Syrma SGS Technologies, a leading electronics manufacturing services (EMS) provider in India, stands to gain significantly from a potential return of Donald Trump to the White House, driven by the global economic shifts anticipated under his leadership.

The company specialises in a wide range of services, including product design, engineering, printed circuit board assembly (PCBA), box building, and testing, and caters to diverse industries such as consumer electronics, automotive, industrial, IT, railways, and healthcare.

With Trump's return to power, there is expected to be a stronger push for decoupling global supply chains from China, leading to increased manufacturing activities in countries like India.

As businesses look to diversify their production away from China, Syrma SGS Technologies is well-positioned to capture this demand with its strong capabilities in electronics manufacturing.

The company's existing expertise in consumer electronics and automotive sectors makes it a prime beneficiary of the ongoing "China+1" strategy.

Syrma SGS Technology's Financial Snapshot (FY20-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	12.2	10.4	132.7	100.9	54.0
Operating Profit Margin (%)	0.2	0.1	0.1	0.1	0.1
Net Profit Margin (%)	11.1	6.5	5.3	60.0	3.9
Return on Equity (%)	43.1	11.8	9.5	8.0	7.7
Return on Capital Employed (%)	49.1	15.9	15.6	12.6	12.4

Source: Equitymaster

Syrma SGS Tech's revenue grew at a CAGR of 54.9% from FY20 to FY24, while net profit saw a rise 42.8%.

The company maintained strong financial health, with an average RoE of 16% and RoCE of 21.1%.

Furthermore, Syrma's leadership in RFID product manufacturing in India places it in a strong position to leverage the increasing demand for automation and digitalisation across industries, including supply chain management, retail, and logistics.

As a company already deeply embedded in the manufacturing of high-tech components, Syrma SGS is set to play a key role in the shift toward more localised, efficient, and diversified supply chains spurred by geopolitical changes under Trump's policies.

Syrma SGS's Managing Director, Jasbir Singh Gujral, expressed confidence on 28 October 2024 in the company's ability to achieve its financial targets for FY25. He projected a 40-45% increase in revenue and an EBITDA margin of 7%.

For more details, see the Syrma SGS Technology company fact sheet and quarterly results

onclusion

While a Trump win could provide a brief boost to market sentiment in India, this rally may not last long.

These are speculative assumptions, and the outcome could very well play out differently. With the markets already priced to perfection and Q2 earnings falling short of expectations, a correction could be on the horizon.

On top of that, global factors, including the ongoing conflict in the Middle East, could have a cascading effect, weakening the dollar in a manner reminiscent of Trump's previous presidency when the Dollar index declined and the fiscal deficit widened.

Additionally, his protectionist policies-ranging from tariffs to immigration measures-could create further challenges for global trade, which is already grappling with crises like the Red Sea turmoil and container shortages.

Ultimately, the future is uncertain, and market dynamics could change rapidly, influenced by a wide array of global and domestic factors.

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...