Where do you see the IT sector heading?
The way the markets have been posting the large caps numbers, we saw a good amount of selling. Midcaps suffered a lot – almost 20-25 per cent in lot of stocks. We saw selling in midcap IT companies. But now the valuation looks quite convincing after this selloff and we are just near to the bottom that looks like for a lot of IT companies and I feel that from here risk to reward becomes very-very favorable for a lot of IT players. So my sense is one should take a call and look at few midcap IT companies like both L&T twins have corrected, almost 20 per cent from the peak. So they look interesting. The numbers have also been by and large what we were estimating or the street was estimating in line with it. HCL Tech also reported a decent set of numbers. So all these three companies which I mentioned looks like one should start building up portfolio from now and there should be a good amount of allocation from here.
What is your take regarding the entire buzz around Holcim exiting India and the reaction that we have seen in the cement pack? Do you like any specific companies from , Shri, , Ambuja given the fact that real estate demand is also expected to be high or would you suggest that there are margin pressures? There are pricing concerns that Shree talks about, which side of the debate are you inclined towards?
If I look at it, if any of the deal goes through, there will be a re-rating in the entire cement pack. The valuations will be on the new valuation benchmark which will happen. So you will see a lot of other midcap cement companies which will get re-rated and the valuations metric might change. So my sense is obviously top of the notch, if you want to stay in the large cap I think UltraTech remains top bet and if I go into the midcaps where the beta should be high so I feel that in that case Birla Corp is what we like and
. So these are the three cement companies one should look at. But I feel that if any of this large deal goes through also there will be a massive-massive re-rating in the companies and near term challenge will be there for the margin pressure for the cement companies because of the petcoke prices, volatility but the secondly if you look at the way the infra demand which is coming up which will be compensated against this volatility. So my sense is one should look at building up the cement stocks for their portfolio.
What your take is regarding this entire space because now trades at a premium to HDFC Bank and this is the first time it has happened, do you think it is time now for HDFC Bank to hand over the leadership to ICICI Bank?
I don’t think so. HDFC will remain the leader and these are all temporary phases which have been going on and if you look at the HDFC Bank I do not think that any of the cases last 10-12 years which has underperformed in terms of numbers which have disappointed the street . So my sense is this is all temporary hedge. Maybe a quarter or so things might settle and more clarity on the mergers and all again we will see HDFC taking the leadership again. However, ICICI numbers should also be blockbuster and what we feel is all wholesale bankers will tend to do well this year. So I think ICICI, both should do well this year so obviously the leadership remains with HDFC, obviously it has come down so it is a good opportunity one should build it up at these levels.
And one space that we have not talked about is metals. Do you think the best of the rally is behind us?
Metals still have lots of steam left. We have seen that most of the companies reported a strong Q3 numbers and Q4 also what we have been hearing is also that the number should be strong. So maybe especially on the steel pack steel companies will continue to do well this quarter also so my view is lot of steam left. Obviously the input costs have gone up a lot in this space as well but the margin will be high, the numbers reported will be much better in this Q4 as well. So what we have seen the outperformance of the metal sector in this overall the price performance in Q4 so this should continue. So my view is one should look at Tata Steel, the numbers should be quite strong in terms of this. Second, again I feel that
will also report a strong set of numbers. In metals pack again looking at the entire story and metal pack that should also report, so in short I think we should have all three stocks as a basket in the portfolio in metal pack.
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