Following up on its thesis that a surge in domestic consumption will prop gross domestic product in the next few years, economists at DSP Merrill Lynch said that the spillover will benefit companies in new areas such as entertainment, leisure, travel and retailing.
Besides existing companies, a whole gamut of new companies would stand to gain from this change in GDP drivers.
The investment bank said on Tuesday that India's GDP is expected to double to around $1 trillion by 2010, driven largely by a two-fold increase in household consumption spend, which in turn is expected to be fuelled by increased opportunities in the services sector.
The steady change in India's demographic profile -- rising income, favourable change in the age profile, increasing consumerism, availability of inexpensive retail credit and a boom in the services sector -- will see a doubling in household consumption spend to $510 billion by 2008 from $250 billion in 2003.
Sectors like financial services with key listed companies such as ICICI Bank, HDFC, HDFC bank, SBI, Corporation Bank, Bank of Baroda, Canara Bank and Punjab National Bank could benefit from the increased consumer spend.
The beneficiaries of this trend from the insurance sector will be ICICI-Pru life, HDFC Standard life, OM Kotak Mahindra, Tata-AIG life, SBI Life and Reliance Life.
Companies like Nestle and Godrej Consumer from the FMCG/personal care segments; consumer durable companies such as BPL and Videocon; and firms such as Trent and Pantaloon from the retailing sector will benefit from the jump in consumer spend.
Automobile companies such as Maruti and Hero Honda; hotels such as Indian Hotels, East India Hotels and ITC; travel services firms such as Thomas Cook; media & entertainment companies such as Zee, Balaji, Adlabs could benefit from the increased consumer spend.
The spillover could also benefit telecom service providers such as Bharti Televentures and Reliance Telecom and health services company such as Apollo Hospitals.
The key sectors that will spearhead growth within the services sector, both in terms of spurring consumer demand and also employment opportunities, are information technology enabled services, telecom, insurance, and financial services.
"We estimate that fresh employment opportunities for 80,000 to 100,000 graduates will be generated annually from the overall services sector in India," DSP Merrill Lynch economists said.