Motilal Oswal’s Gautam Duggad Picks Pockets Of Opportunity In These Five Sectors
Financial stocks may be poised for a rally this year going by post-earnings commentary coming in from some of the lenders, according to Gautam Duggad.
However, the pain for the struggling automakers would continue as the head of research of institutional equities at Motilal Oswal said the companies sounded “a bit more weaker”.
Speaking to BloombergQuint, Duggad said Titan Company Ltd. remains his “top consumption pick in India”. “There is enough opportunity in the stock to make money,” he said, adding that India’s largest branded jewellery maker has benefited from the shift to organised players. “The lack of competition and regulatory tailwinds will continue to aid Titan.”
Gautam Duggad’s Sectoral Outlook
- Asset quality to rebound; decline in fresh slippages positive for the sector.
- Overall valuations aren’t expensive, barring few quality retail banks like HDFC Bank and Kotak Mahindra Bank.
- Asset quality improvement is underway at ICICI Bank, Axis Bank and State Bank of India; valuations are good.
- Underlying performance is robust enough to look beyond one or two years of expensive valuations.
- Average revenue per user for Bharti Airtel Ltd. and Vodafone Idea Ltd. seen picking up.
- Bharti Airtel has shown improvement in deleveraging its balance sheet and ARPU.
- Remain cautious on Vodafone Idea due to debt issues and capex spends.
- Sector looks better but can’t be 100 percent confident due to elevated risks of competitive intensity.
- Need to keep an eye out for Reliance Jio.
- Motilal Oswal is more biased towards Bharti Airtel.
- Companies voiced concerns over rural consumption slowdown.
- Slowdown expected to continue in current quarter as well.
- Late onset of monsoon would cause more problems going forward.
- Difficult for companies to report margin improvement of expanded base.
- See stagnant volume growth for a few quarters.
- Need to be selective in the space.
- Barring Hindustan Unilever Ltd., other firms didn’t report good volume growth.
- Should own HUL’s stock for 5 years to 10 years.
- While some pockets improved inventories, underlying weakness continues.
- Transition to BSVI emissions standards may help.
- Stock prices may not correct much on lower monthly numbers.
- Like Maruti Suzuki and Motherson Sumi.
- Only good thing is valuations.
- Prefer Coal India Ltd. and Power Grid Corporation of India Ltd. from valuation perspective.
- Don’t see substantial upside in the sector.
Watch the full interview here: