Valentis Advisors’ Pockets Of Interest Amid Weak June-Quarter
While the banking sector is expected to drive growth in the first quarter, Valentis Advisors’ Jyotivardhan Jaipuria sees “pockets of opportunity” in cement and capital goods stocks as well.
“The headline numbers would not look that bad,” Jaipuria, chief executive officer at the investment firm, told BloombergQuint in an interview. The profit for the Nifty companies would be positive in about mid to high single-digits, driven mainly by the banks, he said.
But the cement companies are also expected to report “good earnings” in the first quarter, led by pricing and higher utilisation, partly offset by seasonal weakness, Jaipuria said. The metals and auto space, however, would drive growth down, he said.
Jaipuria sees India in a “vulnerable” situation, if and when the global markets go through a correction. “India keeps under-performing the global market... If we get a global market correction, India will be part of it and that is something we can’t avoid.”
- Sector is under-owned and has under-performed.
- Earnings could see a sharp growth in two to three years.
- Can outperform the market in next 12-18 months.
- All-time high valuations at a time earnings are slowing down.
- Expects weak guidance in this quarter.
- Can see de-rating.
- Difficult to take a year-long view.
- Consolidation in the industry is a good thing from a six- to nine-month perspective.
- Crude is a major volatile factor for the sector.
- Don’t own big pharmaceutical companies.
- Mid caps not much impacted by rising generic pricing pressure in the U.S.
- Valuations are not extreme.
- Structural issue in the U.S.; Indian generic manufacturers to always face pressure.
Watch the full interview here: