When it comes to investing in companies for the long-term, the most important aspect one must consider is the future of the company's product or service.
This means that for at least the next 10-15 years, the products should be in use. The last thing you want is for the product to become obsolete and the company to go out of business.
Furthermore, to generate good long-term returns from stocks, it is important to invest in areas that are developing.
Few sectors in India, such as utility, mining, and others, were good in the past and developing at a decent pace. However, these sectors are hardly in trend these days.
Hence, with changing market dynamics, one should invest in sectors that have scope for growth.
Here's a list of 4 sectors that are expected to grow in the next few years.
India is the sixth-largest producer of chemicals in the world.
The chemical sector is immensely diverse, covering over 80,000 commercial goods and can be divided into bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers, and fertilizers.
India is a global leader in chemical exports and imports, ranking 14th in exports and 8th in imports.
Domestic demand recovery and strong exports will drive a 50% YoY increase in specialty chemicals manufacturers' capex in fiscal 22 to USUS$ 815-842 m.
Despite a drop in demand for polymers as a result of the COVID-19 pandemic, India is likely to witness growth to 32 m tonnes by 2030 in agrochemicals and pesticides.
To stimulate domestic agrochemical manufacturing, the government proposes to implement a production-linked incentive (PLI) scheme.
The Department of Chemicals and Petrochemicals was given US$ 27.43 M in the Union Budget 2022-23.
With all the above mentioned, it seems the chemical sector holds a good future and with growing demand and capex plans, one can expect good returns from this sector.
Here's a list of top chemical sector company and their performance
Light, Camera, Action!
The multiplex industry is back in the spotlight.
The multiplex industry was one of the largest casualties of the Covid-19 pandemic. All the restrictions and regulations imposed in the past eighteen months of the pandemic caused major losses to the industry.
However today with the world bidding farewell to the pandemic, the multiplex industry is likely to be one of the multibagger sectors of the future.
People are back in cinema halls enjoying popcorn and Dolby surround sound.
Investors took to the news with great euphoria as the merger is expected to increase free cash flow, bargaining power, and cost synergies for the merged business.
PVR is currently working with 860 screens and is investing Rs 240-300 m to set up the upcoming property with and has signed an agreement with real estate developer M3M India.
Carnival Cinemas also hopes to have more than doubled its screen count to 1,000 by the end of the year 2023.
Have a look at how multiplex stocks have performed lately…
#3 Solar Energy
In the last 7 years, India has seen the highest growth in renewable energy capacity addition among all major nations, growing 18 times, from 2.6 GW in March 2014 to 49.3 GW by the end of 2021.
Rapid technological advancements, government incentives for solar panels, and the growing competitiveness of solar energy storage batteries have all aided in the deployment of clean energy.
In the last few years many investments and developments have been made in the solar sector.
Even recently, the Solar Energy Corporation of India (SECI), which is currently responsible for the development of the whole renewable energy industry, has been allocated Rs 1 bn in the Union Budget 2022-23.
It has already held large-scale central auctions for solar parks, awarding contracts for 47 parks with a total capacity of over 25 GW.
Going forward, solar energy is predicted to provide roughly 280 GW (almost 60%) to the country's energy mix.
With an anticipated investment of US$ 15 bn this year, India's renewable energy sector is expected to expand in 2022, as the government concentrates on electric vehicles, green hydrogen, and solar equipment production.
Let's have a look at how solar sector stocks have performed lately…
#4 Electric Vehicles
Investors, now a days are interested in any company that is even remotely related to electric vehicles.
You see, according to a report by the India Energy Storage Alliance, the EV market in India is expected to grow at a CAGR of 36% until 2026. Furthermore, the EV battery market is expected to grow at a CAGR of 30% over the same time period.
After recovering from the Covid-19 pandemic, the Indian automobile sector is growing rapidly in 2022-23. Electric vehicles, particularly two-wheelers, are expected to have increased sales in 2022-23.
By 2030, India might be a global leader in shared mobility, paving the way for electric and autonomous vehicles.
By 2030, the electric vehicle industry is also expected to generate 50 m jobs.
Observing governments' plans for this sector, several automobile firms are diving into electric vehicles business.
To meet India's EV ambitions, a cumulative investment of US$ 180 bn in vehicle production and charging infrastructure would be required until 2030.
Well looking at these initiatives by the government, one can imagine how stocks in this sector will become a multibaggers in the future.
Let's have a look at how the companies of this sector have performed lately…
Well, these are the sectors that may give exponential returns in the upcoming future.
These sectors are backed by government policy and public interest in the product/service provided by the company.
However, in this volatile market where each day is different, it is very necessary to invest carefully.
Brace yourself for a bumpy right ahead, but with the right information and proper judgment, this ride can become beautiful too.
Remember, think twice, and invest wise.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)