Latest news with #DipanMehta
Economic Times
20 hours ago
- Business
- Economic Times
Which sectors will outperform the market in 2025? Hospitals, airlines, or something else?
Pratik Gupta, CEO and Co-Head, Institutional Equities, Kotak Securities, says IT services, consumer sectors, and banks are expected to underperform due to factors like low volume growth, lower NIMs, and higher credit costs. Conversely, hospitals, hotels, airlines, and Bharti Airtel are favoured for their domestic focus and secular growth. While private banks may not outperform in earnings, their attractive valuations make them appealing compared to overvalued sectors like EMS companies. ADVERTISEMENT What is your take on the earning season so far because now that we have finished with all of the Nifty 50 earnings, and particularly the last three have been quite strong. How has the earning season been so far? Any unexpected misses or surprises that you have spotted? Pratik Gupta: As far as the earning season is concerned, it has been broadly in line with somewhat muted expectations ahead of the earning season. For example, for the Nifty as a whole, we were expecting about 5% earnings growth. That has come in at about 6.5-7% for the June quarter. But more important has been the commentary and the guidance which has been weaker than expected and the continuing weakness in the economy. At Kotak, we cover about 300 companies, so for the broader universe and more importantly for the Nifty 50, before the start of the June quarter earning season, we were projecting about 12% earnings growth in FY26. That estimate has now come down to 10% and our analysts still see further downside risks if things do not pick up in the next one or two quarters. So, the earning season has been okay and there are a lot of hopes now on the second half post monsoon recovery, the festive season demand, the impact of the RBI rate cuts. Dipan Mehta highlights capital goods and power as next market leaders Obviously most important is the expectation that the Trump tariffs will somehow come down to more reasonable levels next week or later this month. If those things do not pan out, then as far as earnings are concerned, we could be in for some negative surprises going forward. In this kind of flux of all the news flow, all question marks about what the festive season is going to do, what the government intends to do after the big fillip of 50 bps cut from the RBI, and the big question mark on tariffs, how should investors be positioning themselves now because at best you only have very tactical short-term visibility? Pratik Gupta: You are right, which is why we are recommending a somewhat cautious stance. We do not think this is an environment where you need to take on risks. We would recommend a couple of broad themes. One, look at domestic plays rather than export plays. Second, look at quality versus value momentum, cyclical kind of plays. The third is a corollary of the second one; largecaps versus the small and midcaps, tend to weather an economic slowdown much better. What is clear is we are going through a slow growth patch and this may persist for some more time and who knows it may get worse if the tariff headwinds do not abate. So, we are in for a tough economic environment. We do not see signs of a very strong domestic economic recovery, at least not in the short term. We have not seen any sort of government action as such coming through in terms of reforms. So, until then you have to be somewhat cautious. So, stick to domestic plays, stay away from IT services for example, where even before the US tariff threat, we were concerned about high valuation and the weakness in discretionary IT spending. Then we have got the AI risk coming through, we had ChatGPT 5 being released last week, and that just shows overall how things are moving in that direction. So, generally be cautious, stay away from cyclical or rather high beta plays, be defensive and do not try and be a hero in this environment, that is sort of the broad advice. ADVERTISEMENT You have been mentioning that you have made some tweaks in your earnings estimate which is now down to 10% versus 12% earlier. Help us understand which sectors are you sporting that may outperform this growth number because of late, we have seen some sectors and rather some companies talking about double-digit growth. A case in point is hospitals, the EMS companies and select pharma companies as well. Pratik Gupta: Let me begin with the sectors which are likely to underperform and that is usually typically this year it has going to be the IT services companies, the consumer sector where volume growth is still low single digit, revenue growth in maybe high single digits, and even the banks this year are likely to not show very strong earnings both a combination of lower NIMs as well as higher credit costs. These are the large sectors which will likely underperform. Unlock 500+ Stock Recos on App When it comes to outperformance, as you rightly pointed out, some of the sectors you mentioned we also like them. Hospitals are definitely a space we like. This is a sector which is somewhat unimpacted by the tariff situation or global slowdown, and so that is a secular growth story. Valuations are a bit on the topish side, but nonetheless growth is very strong. So, we like the hospital space. ADVERTISEMENT Hotels, airlines are the other sectors we like. Again, more domestic-focused, less impacted by what is going on globally or with tariffs. In telecom, frankly, there is just one play, Bharti Airtel, and we like that one as well. We also like some of the leading NBFCs where the decline in funding costs should basically help them and the credit cost impact may not be as much. So, we like some of the NBFCs. We do not think private banks will outperform from an earnings perspective but valuations have come off. A lot of these stocks have come down sharply and in the context of the overall market, these stocks are looking relatively more attractive. The Nifty is trading at 21 times. So, we have to look for not just where earnings are very strong like the EMS companies that you pointed out. They have very strong earnings growth, but valuations are off the charts. These stocks are trading at 60 to 80 times one year forward earnings. We like the businesses but not the stocks and which is why we would rather be in businesses which are not doing as well like the banks but where valuations are a lot more attractive. ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
21 hours ago
- Business
- Time of India
Which sectors will outperform the market in 2025? Hospitals, airlines, or something else?
Live Events You Might Also Like: Dipan Mehta highlights capital goods and power as next market leaders You Might Also Like: Portfolio reshuffling contributing to market volatility? Deven Choksey explains You Might Also Like: We are holding 14-15% in cash in this slightly bearish undertone market: Siddharth Vora (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel CEO and Co-Head, Institutional Equities,, says IT services, consumer sectors, and banks are expected to underperform due to factors like low volume growth, lower NIMs, and higher credit costs. Conversely, hospitals, hotels, airlines, and Bharti Airtel are favoured for their domestic focus and secular growth. While private banks may not outperform in earnings, their attractive valuations make them appealing compared to overvalued sectors like EMS far as the earning season is concerned, it has been broadly in line with somewhat muted expectations ahead of the earning season. For example, for the Nifty as a whole, we were expecting about 5% earnings growth. That has come in at about 6.5-7% for the June quarter. But more important has been the commentary and the guidance which has been weaker than expected and the continuing weakness in the Kotak, we cover about 300 companies, so for the broader universe and more importantly for the Nifty 50, before the start of the June quarter earning season, we were projecting about 12% earnings growth in FY26. That estimate has now come down to 10% and our analysts still see further downside risks if things do not pick up in the next one or two quarters. So, the earning season has been okay and there are a lot of hopes now on the second half post monsoon recovery, the festive season demand, the impact of the RBI rate most important is the expectation that the Trump tariffs will somehow come down to more reasonable levels next week or later this month. If those things do not pan out, then as far as earnings are concerned, we could be in for some negative surprises going are right, which is why we are recommending a somewhat cautious stance. We do not think this is an environment where you need to take on risks. We would recommend a couple of broad themes. One, look at domestic plays rather than export plays. Second, look at quality versus value momentum, cyclical kind of plays. The third is a corollary of the second one; largecaps versus the small and midcaps, tend to weather an economic slowdown much better. What is clear is we are going through a slow growth patch and this may persist for some more time and who knows it may get worse if the tariff headwinds do not we are in for a tough economic environment. We do not see signs of a very strong domestic economic recovery, at least not in the short term. We have not seen any sort of government action as such coming through in terms of reforms. So, until then you have to be somewhat cautious. So, stick to domestic plays, stay away from IT services for example, where even before the US tariff threat, we were concerned about high valuation and the weakness in discretionary IT spending. Then we have got the AI risk coming through, we had ChatGPT 5 being released last week, and that just shows overall how things are moving in that direction. So, generally be cautious, stay away from cyclical or rather high beta plays, be defensive and do not try and be a hero in this environment, that is sort of the broad me begin with the sectors which are likely to underperform and that is usually typically this year it has going to be the IT services companies, the consumer sector where volume growth is still low single digit, revenue growth in maybe high single digits, and even the banks this year are likely to not show very strong earnings both a combination of lower NIMs as well as higher credit costs. These are the large sectors which will likely it comes to outperformance, as you rightly pointed out, some of the sectors you mentioned we also like them. Hospitals are definitely a space we like. This is a sector which is somewhat unimpacted by the tariff situation or global slowdown, and so that is a secular growth story. Valuations are a bit on the topish side, but nonetheless growth is very strong. So, we like the hospital airlines are the other sectors we like. Again, more domestic-focused, less impacted by what is going on globally or with tariffs. In telecom, frankly, there is just one play, Bharti Airtel, and we like that one as well. We also like some of the leading NBFCs where the decline in funding costs should basically help them and the credit cost impact may not be as much. So, we like some of the do not think private banks will outperform from an earnings perspective but valuations have come off. A lot of these stocks have come down sharply and in the context of the overall market, these stocks are looking relatively more attractive. The Nifty is trading at 21 times. So, we have to look for not just where earnings are very strong like the EMS companies that you pointed out. They have very strong earnings growth, but valuations are off the charts. These stocks are trading at 60 to 80 times one year forward earnings. We like the businesses but not the stocks and which is why we would rather be in businesses which are not doing as well like the banks but where valuations are a lot more attractive.
Time of India
21 hours ago
- Business
- Time of India
Dipan Mehta highlights capital goods and power as next market leaders
"If you strip out the earnings growth coming from some PSU banks, a large number of NBFCs and private sector banks have clearly disappointed. My understanding is that this industry is becoming highly competitive—a 'red ocean'—making it very difficult for banks to sustain the kind of growth rates we were used to four or five years ago," says Dipan Mehta , Director, Elixir Equities. What has been your read on the entire banking pack? The MFI segment pressure seems to be consistent across the board—of course, larger in magnitude for companies with a significant portion of their book in MFI exposure. How should investors approach banks right now? Do you see it as a bottom-up play? Do you buy the dips after earnings, or stick with the leaders? Dipan Mehta: One of the biggest disappointments this earnings season has been the banking sector . We expected net interest income and pre-provisioning profits to improve, but that hasn't materialized for various reasons, despite interest rate cuts and better liquidity conditions. We also thought that provisioning for NPAs would move in line with, or slightly above, the growth in pre-provisioning profits—but that hasn't happened either, which is a real cause for concern. Finance Value and Valuation Masterclass - Batch 4 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program Finance Value and Valuation Masterclass - Batch 3 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals By Vaibhav Sisinity View Program Finance Value and Valuation Masterclass - Batch 2 By CA Himanshu Jain View Program Finance Value and Valuation Masterclass Batch-1 By CA Himanshu Jain View Program by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Health and comfort: the comfiest slip-on shoes of the year Ultra-Comfortable Shoes Undo If you strip out the earnings growth coming from some PSU banks, a large number of NBFCs and private sector banks have clearly disappointed. My understanding is that this industry is becoming highly competitive—a 'red ocean'—making it very difficult for banks to sustain the kind of growth rates we were used to four or five years ago. Although banks carry significant weight in the Sensex and Nifty—which is one reason why these indices aren't moving up—their earnings growth isn't impressive. Going forward, investors may need to look beyond this sector to achieve outperformance versus the broader market. Of course, there could be cyclical improvements due to lower interest rates or a strong festive season, but the era when large-cap banks delivered assured 15–20% growth seems to be over. And that's the problem—you rightly highlighted the massive weightage banks have in the indices and other metrics. Where do you see the next leadership emerging from? Not in terms of weightage necessarily, but at least forming a significant portion of the market? Dipan Mehta: That's a tough one. Banks aren't impressive right now, and the software sector has been disappointing, stuck in a secular stagnation with low single-digit growth. Pharma has performed well, and many companies have given good returns, but the threat of tariffs hangs over the sector, limiting the ability to assign higher valuation multiples. Live Events That leaves capital goods . While there is some earnings volatility, companies like L&T, KEC International, Kalpataru Power, ITD Cementation, and Afcons are broadly performing well. These companies are engaged in building infrastructure and capacity within the industry, and they remain an engine of growth. Investors could consider being overweight in this sector. Additionally, the power equipment, solar, and wind power segments have reported good earnings and are performing well. While their weightage in the Sensex and Nifty is small, they could emerge as leadership sectors. There's also a potential upside in two-wheeler companies due to a better monsoon and revival in demand. Cement did well last season too, but it's cyclical—profits were higher, but volume largely disappointed. So, overall, while there are pockets of growth, it's challenging to point to any industry that's consistently performing exceptionally across the board.
Time of India
21 hours ago
- Business
- Time of India
Expect sideways, range-bound market in coming months: Dipan Mehta
"Considering these factors, I expect the market to move more sideways over the coming months. More importantly, it will become extremely selective—both across sectors and within sectors. Even within popular investment themes, only a few players are likely to perform well. So, I anticipate the next few weeks and months to be selective and range-bound," says Dipan Mehta, Director, Elixir Equities . Help us understand what you make of the markets. It's one day up, one day down, with very volatile moves in the benchmark indices. Yet, macros are looking strong, earnings so far have been decent, and we are just a couple of days away from ending this earnings season. We haven't seen any major disappointments so far. How do you believe the markets will move from these levels, and what will be the key drivers? Dipan Mehta: I beg to differ slightly. By and large, this earnings season has been a disappointment. If you aggregate all the numbers, profit growth is just 5.4%—the lowest in eight quarters. That is certainly a cause for concern, and the expected improvement in earnings is not materializing. The markets are in a very tight range because liquidity is preventing them from falling, while fundamentals do not justify a rally in stock prices given current valuations. Many large companies, as well as parts of the midcap universe, are experiencing a secular slowdown in earnings growth. Finance Value and Valuation Masterclass - Batch 4 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program Finance Value and Valuation Masterclass - Batch 3 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals By Vaibhav Sisinity View Program Finance Value and Valuation Masterclass - Batch 2 By CA Himanshu Jain View Program Finance Value and Valuation Masterclass Batch-1 By CA Himanshu Jain View Program Considering these factors, I expect the market to move more sideways over the coming months. More importantly, it will become extremely selective—both across sectors and within sectors. Even within popular investment themes, only a few players are likely to perform well. So, I anticipate the next few weeks and months to be selective and range-bound. Yesterday, we saw earnings from Honasa Consumer and Nykaa, both in the BPC (beauty and personal care) and discretionary spending segment. I don't know if you've had a chance to review the numbers, but both seem decent—Honasa even beat estimates, and Nykaa was in line. What do you make of this trend of continuous good quarters for these companies? Dipan Mehta: I would classify both as new-age FMCG companies. Traditional FMCG companies like HUL, ITC, and Nestle operate in mature categories where growth has largely plateaued. For investors still interested in FMCG, the BPC segment represents the real growth opportunity, as reflected in Nykaa's earnings. Live Events Honasa delivered numbers better than street expectations, but looking at year-on-year growth, I wouldn't view the company as particularly strong. Nykaa, however, posted a very impressive set of numbers. If they can execute their apparel and fashion business well and reduce losses there, investors are likely to reward the company, potentially driving stock prices higher. Nykaa's achievements are especially noteworthy given the competitive landscape. If they continue on this path, they could resume a strong wealth-creation trajectory. Another concern is valuation. What's your take on that? Dipan Mehta: That is indeed the challenge. Wherever there is growth, companies are being valued at extremely rich multiples. This makes it difficult because even if the company meets profit and growth projections, the high PE multiples are prone to compression over time. Finding good-quality stocks is challenging even after this mild correction. Broadly, in this earnings season, companies with consistent secular growth of 15–17% over three to five years are trading at 50–70x, sometimes even 100x price-to-earnings multiples, which is unsustainable for long-term returns. There are essentially two sets of companies: those growing above nominal GDP and those that are not. The number of companies failing to grow beyond nominal GDP is steadily increasing, which is a growing cause for concern.
Time of India
7 days ago
- Business
- Time of India
Prefer TVS Motors and Eicher to Bajaj Auto; Trump tariffs a big sword over market: Dipan Mehta
Dipan Mehta , Director, Elixir Equities , says Trump's tariff increase on India creates uncertainty for exporters. Stock prices are stagnant due to underwhelming earnings. Among two-wheeler makers, TVS Motors and Eicher show surprising strength. Hero MotoCorp also posted good numbers as demand seems to be improving for two-wheelers. Bajaj Auto 's results are decent but volatile due to export reliance . The monetary policy has been almost a non-event and there has been a CPI rejig in terms of estimates that we have seen and all that had largely no impact on the market. What is your read through? Dipan Mehta: Yes, it's a bit of a non-event but that is perfectly fine. The RBI has been doing a great job in terms of expectation management when it comes to the currency or the interest rates. So, there are no concerns over there. What has spooked the market and what is hanging like a big sword is these Trump tariffs and although many analysts and many experts have said that the impact will be minimal, 0.3% of GDP by some estimates , but still a lot of investors fear that it is not as simple as that. It is quite a complicated development because it's not just exports to the US but it also affects the competitiveness of India's exports to the rest of the world and its own competitive position as well. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program It is a kind of a flux situation for a lot of exporters because he speaks about increasing tariffs from these levels as well. So, we are in a situation of very vast uncertainty over here and that is impacting the stock prices. Also, the earning season has been pretty much okay. There have not been any great earnings which have really surprised on the positive side. By and large, there have been more disappointments and there is a certain element of stagnancy in earnings which is also resulting in stagnancy in stock prices. Let us talk about some earnings. What is your first take on the Bajaj Auto numbers because largely it looks like a good quarter for Bajaj Auto? Dipan Mehta: More or less, it is in line but the real surprising numbers in the two-wheeler came from TVS Motors and Eicher. Especially Eicher if you strip off the lower profits from the subsidiary which is engaged in commercial vehicles, the core two-wheeler business did very well. Even Hero MotoCorp also came with a good set of numbers. So, we are definitely seeing better demand, better trends for the two-wheeler industry after many quarters. But I am more impressed with the results of TVS Motors and Eicher. Bajaj Auto, of course, had a decent set of in-line numbers, but there is an element of volatility in their earnings because of the large proportion of revenues coming from export markets. So, I would prefer other stocks over Bajaj Auto but nonetheless for the time being, given that there is upswing in the entire sector and the monsoon also will benefit all two-wheeler companies, I would remain invested, but from a fresh investment perspective, there are better alternatives. You Might Also Like: Post this earning season, Pankaj Murarka is avoiding these sectors. Here's why Can auto and IT sectors outperform Nifty over next 3 years? This is what Feroze Azeez has to say
