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Time of India
4 days ago
- Business
- Time of India
We have added 2E Networks in July, exited UPL; prefer HDFC and Axis among private banks: Pramod Amthe
Pramod Amthe , Head Of Institutional Equity Research, InCred Capital , says they are adjusting their portfolio. They are exiting more stocks than adding. E2E Networks is a new addition for July. The firm is exiting UPL to book profit. They prefer HDFC Bank and Axis Bank . Among PSUs, they downgraded Bank of Baroda . The firm prefers largecaps like SBI and Canara Bank . These changes reflect their current investment strategy. We are going nowhere. Currently at 24,600, but for the past four to six weeks, we are just swinging between the 24,500 mark and 25,300. Do you think this consolidation phase will continue for longer than anticipated? Pramod Amthe: We have been broadly indicating that the market will remain in a consolidation phase, especially where the earnings trajectory has been relatively tepid and no change is seen even in the large part of the results which have come in in the first quarter. On top of that, based on the flows we have seen some excitement coming through, predominantly driven by flows and with the recent overhang of the tariff, especially where India seems to be sidelined as compared to the earlier expectation that we should sail through. It has incrementally added a new dimension and put pressure on the consolidation phase. We stay put with our broader index target where we see a low single digit return for this calendar year and that seems to be prevailing for the last couple of months. 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We started the earnings trajectory with the IT numbers. After the Q1 numbers from the major IT companies, the sector was in a downturn, but now it is witnessing some sort of momentum. If we talk about the sector specific approaches, which are the sectors on your radar at present? Pramod Amthe: You are right. What we have selectively done in the recent result season is clearly pre-results or in the last couple of weeks, the extent of valuation correction that has happened is much steeper than the analysts' EPS consensus cuts. Just to give you some numbers, EPS cuts in the last six months have been in the region of around 8% and versus that, the index has corrected at nearly twice that pace. We clearly see some selective opportunity on a tactical basis where we have upgraded Wipro and L&T Tech Services and that seems to be more tactical because there is still an overhang about the global growth and especially how the US will shape up post the tariff tantrum. So that is the one which we have seen. In the recent weeks, where we have seen some stability is in the FMCG. The index has seen stability and is making a comeback. We have upgraded HUL to an Add. They are getting the portfolio more towards premium and green shoots are visible in terms of the volume growth. So those are the couple of select plays which we are looking at on the tactical front. What are your high conviction stock bets? There is a Nifty outperformer in Thyrocare which is still there on your list. What are the other high conviction bets that you have taken currently? Pramod Amthe: Within the high conviction, we are still exiting more stocks than adding. Last month, we added the largecap NTPC versus the four stocks which we exited. For the month of July, we are looking at the recent initiation of E2E Networks which is a proxy play for India EAI spend and there we have started with the add rating and with the new parent L&T is coming in to pivot the business as a more B2B than a B2C. We feel the runway for growth is going to be drastic for E2E, and that is a new addition which we are making for July. Against that, we are exiting UPL in the high conviction list of 22, 23 stocks of our total 200 stocks coverage. Live Events You Might Also Like: Post this earning season, Pankaj Murarka is avoiding these sectors. Here's why The reason to exit UPL is we got the bottom right. The sign of cyclical reversal is clearly visible in UPL, but the results have been a dampener, and so we would like to book our profit in UPL on the short-term basis. You are overweight on financial services overall. If you talk about PSU and private banks, do you see some kind of distinction coming in as far as this quarter is concerned? The interest rate trajectory is quite visible with the 50 basis point cut that was announced in the last policy. In the monetary policy due tomorrow, the expectation is that a 25 basis point cut may be there. So, how should one approach PSU and private banks particularly? Pramod Amthe: We are more inclined towards the private banks where the central bank policy towards reviving the credit growth, even though the signs are still not completely visible, should play out in favour of the private banks wherein our high conviction is on HDFC Bank for the quality and Axis Bank for playing on revival of credit growth. So those are the high conviction ideas. Among PSUs, we are selective and have downgraded Bank of Baroda . So, the preference is more towards largecaps like SBI and also towards Canara Bank versus the other PSU banks.
Time of India
25-04-2025
- Business
- Time of India
Axis Bank a buy after recent correction; prefer Canara Bank over SBI among PSBs: Pramod Amthe
Pramod Amthe , Head of Institutional Equity Research, InCred Capital , says though they are overweight on financial services , strategic adjustments are underway, favoring companies with growth-oriented approaches and improved liquidity . Axis Bank 's recent correction presents a buying opportunity, capitalizing on easing interest rates and credit availability . While quality stocks and safer banks initially thrived, others are expected to follow suit. Amthe favours Canara Bank over State Bank of India within the PSU banking sector. Help us with your take on the markets because from those March lows, what a move that Indian markets have seen! But given the up move, what is the strategy that you are building at this point in time? Are we comfortably sitting in terms of the valuation and also what is your outlook when it comes to the broader end? Pramod Amthe : Valuation comfort is definitely there, but the concern is, we still do not seem to be bottoming out on earnings in spite of being seasonally strong quarter March. The expectations are pretty tepid. Just around 2% QoQ growth in the Nifty 50 earnings versus a full year and a single digit YoY growth that does not give a confidence of earnings to sustain and events of geopolitical tensions bring in negative surprises and test case the earnings volatility. That is not factored in fully to the extent the bounce back came in where the participation from small and midcaps have been much sharper, with almost twice the momentum as compared to the largecaps. That gives us some amount of concern. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo Many of these companies may not be as well balanced to handle international as well as domestic geopolitical tensions. So, we remain cautiously optimistic in that sense. You just said that despite a seasonally strong quarter, Q4 earning consensus EPS expectations has been in just single digit of 8% on a year-on-year basis. There has been no respite on the EPS downgrade trend as yet. When do you see a reversal coming in and also was not the earnings downgrade already priced in when we saw that draw down? Pramod Amthe: It has to be seen in the context of how the macro effort by both the Government of India and RBI will play out. Our sense is we will get some handle about the outlook management commentary from the April-May for the full year and people will bake in those numbers first. Second, we need to see some revival at the end markets by both interest rate reduction and also from the income tax reduction. So, hopefully from July-August, we should be preparing for some settlement and then a demand which should ultimately dry down and should set in the better expectations for the rest of the year. That might be a couple of more months unless and until we see some shocks like what we are currently going through. Other than that, we expect the bottoming to happen somewhere in the mid or the early part of September quarter for the EPS momentum. Live Events You Might Also Like: Buy the dip in case of a big gap-down opening on Monday; 2 stocks to pick: CA Rudramurthy BV Help us with your take on the financials because the harsh reality is that going ahead we will be witnessing some rate cuts which does not bode well for the financial counters. But despite the fact it is Nifty Bank that is at all-time high levels including some of the largecap names, valuation was comforting, but how are you looking at the financial space right now? Are you bullish or cautious on the markets right now? Pramod Amthe : If you look at it top-down, we are overweight on the entire financial services, but we are more selective. What we are incrementally changing is clearly the central bank is more in favour of growth orientation and improving liquidity where we have upgraded Axis Bank which today's correction on the management commentary gives an opportunity to build on to the same. We want to be able to play out this momentum on the easing interest rates and also the credit availability as compared to the recent week's performance where quality stocks have played out in a much stronger manner as the flight for safety and where the relatively safer banks have been able to showcase a better deposit mobilisation and has a possibility of credit growth. But as we go forward through the year, others will join the case and we are selectively also looking at some of the PSU banks where our preference is more for Can Bank as compared to SBI in the similar space. You Might Also Like: Markets found a temporary bottom on hopes of likely trade deals with China, India: Peter Cardillo Pakistan stock market falls 2% after India suspends Indus Waters Treaty over Pahalgam terror attack
