Latest news with #PramodAmthe
Time of India
a day ago
- Business
- Time of India
Pramod Amthe on 3 stock ideas for June and 2 stocks where they booked profit
Pramod Amthe , Head of Institutional Equity Research, InCred Capital , says they have booked profit in Adani Port and moved out of Cipla due to margin challenges, while introducing Camlin Life Science, anticipating stabilization and benefits from anti-dumping duties. Thyrocare with new franchise expansion and Birla Corp's undervaluation drove outperformance in May. InCred also upgraded two stocks around February, March at the bottom of the market, Bajaj and SAMIL. Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like An engineer reveals: 1 simple trick to get all TV channels Techno Mag Learn More Undo What is your take on the markets because the earning season just got concluded. It seems to be a decent set vis-à-vis the consensus street estimates. What was your take on the earnings as well as from here on where do you see the markets headed broadly? Pramod Amthe: If you look at earnings season for Nifty 50, the growth is still tepid on the EPS basis at around 5%. This was broadly in line with the expectations and that is a comforting factor. But for all the 4,000 odd listed companies, the growth is around 9%. So, the mid and smallcaps are definitely giving a better profit growth even in the March quarter, which is similar to the December quarter growth of 9%. Having said that, some of the macro factors have played out well for India in the sense of the last fortnight prediction for early onset of monsoon, or the oil prices coming down. So, macros are getting much quickly factored into the marketplace and hence the inclination more towards our bull case index targets are playing out, better than the expected in the short term. You have a couple of high conviction stock bets. To name a few, there are Thyrocare, Birla Corp, Shriram Finance, TCS, Bajaj Auto, and Lupin. What is the rationale behind these high conviction stock ideas and from here on, how do you see these stocks moving? Pramod Amthe: High conviction is a monthly bottoms-up approach which we look at for our 200 stock coverage universe. What we have done for June, the ones which you listed, have been there for the last couple of months. What we have done in case of our high conviction ideas is we have booked profit in Adani Port which has been one of the good performers in the last couple of months as it is near our target price and risk-reward at this juncture we feel is not too much in favour. Live Events You Might Also Like: Nilesh Shetty stays cautious; 3 sectors see largest allocations in value portfolio We have moved out of Cipla which has been high conviction for the last couple of months because we feel there can be near-term margin challenges because of the product mix related issues. At the same time, we have introduced a smallcap name Camlin Life Science which is going to see the stabilisation of the vanillin plant along with the benefit of rights issue and the imposition of anti-dumping duties is going to give a substantial upside from the current levels. These are the three stock ideas for this month along with the remaining 17 to 18 of which you have taken a couple of stocks that have been big outperformers for us in May. As you rightly called out, one is Thyrocare on a strong visibility of new franchise expansion leading to the momentum in sales and the loss making division turning around on the high-end pathological test is the key driver for Thyrocare. Birla Corp is more on the midcap undervaluation per tonne basis is what plays out along with some momentum in the cement as seen in the fourth quarter results. Those are the things which have played out for us in these two stocks. You have a neutral stance on auto as well as auto ancillary space. But amidst that, Bajaj Auto is one of the underperformers to the Nifty but you have an add rating there. What is the outlying factor for Bajaj Auto and why do you like the stock? Pramod Amthe: We upgraded two stocks around February, March at the bottom of the market, Bajaj and SAMIL. Bajaj has seen a decent amount of correction from the top levels. We feel at this juncture the worst of KTM acquisition news is factored in in the current price levels and the valuation. Having said that, the firm has already clearly transitioned itself both into e-three-wheeler portfolio and also in case of e-two-wheelers, they are neck to neck in terms of the leadership in the electric scooters. You Might Also Like: Why is it the perfect time to invest in Nifty 200 Momentum 30 Index? The biggest comfort is the neutrality of the corporate margins in spite of handling such a big transition for the company. Even though the investors are a little bit concerned about the market share loss in motorcycles, we feel that can be addressed with the new product launches and hence at these current valuation with the expected addressable market expanding for them with a low speed scooters and the e-rickshaw, we are definitely looking at mid-teen to high-teen earnings growth for them in the next two years. I want to talk about two sectors – IT and the consumption basket. You have a neutral stance on both these packs. In IT, the valuations look better after the leg of correction that we have seen though there are some global headwinds. Analysts are becoming constructively more bullish on the IT pack primarily based on the valuation comfort there. You are neutral on consumer staples. Do you see consumer staples picking up now because of the positive triggers from rate cuts or the food inflation easing and good monsoon ahead? Pramod Amthe: Recent channel checks on it indicate that there are still headwinds. The recent restriction in terms of travel to India is going to be a little headwind to close the deals, especially large deals which have been the drivers of topline for it excluding, so we downgraded it somewhere in early part of the calendar year to neutral. We continue to hold the same as the full year guidance has not been great, encouraging, and the short-term headwinds on travel restrictions do play out in the short term. Other than the valuation factor, the topline outlook is still dim. So, we stay put with that rating. In terms of FMCG, we have been much more selective in the names which we want to play out in the FMCG sector. I would say the broader play in terms of interest rate sensitive are going to be the way we would like to play out is more on autos where we are neutral than on the consumption or on the FMCG basket where we would like to play more on the high-end side which is Ethos and the derivative of the consumption is more on TCPL Packaging which are on the high conviction idea stocks for us. We have dropped a couple of names in the recent past on the consumption side. We dropped out of Pidilite and Marico in the last three months from the high conviction list and have no immediate plans to add them back as the recovery seems to be more back-ended than the immediate benefit.
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
