Modi 3.0 – The Coalition Avtaar: Dolat Capital

Dolat Capital Report

The General Election 2024 results realign the political landscape for India with coalition era back to the fore. The BJP emerges as the single largest party but short of a simple majority making it dependent upon the allies for running the government. Market disappointment was visible in the negative reaction as apprehensions of slowdown in decision making and policy reforms cast a shadow.

We have been highlighting the Modi premium for India Equities – our estimates for the same have varied between 10-20%. We believe that premium is now diluted as the new government is formed under the coalition era and that limits the political veto that the market was pricing in. That essentially leads us to the scenario where multiples will converge towards 16-19x range vs the 18-22 that we have been used to since Covid. And the concomitant impact of this will be the index returns shall be muted in the best case in our view, and a cut of 12-15% in the worst case.

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