Stocks

Samvat Stocks | Deepak Jasani: 18,000-18,200 could be a little tough to breach; have 3 picks this Samvat: Deepak Jasani

“We released Diwali picks on October 17 and I would like to highlight three stocks. One is Bharat Electronics which we like because of its business into defence electronics and also its move into non-defence. We also like , which has transformed itself from a corporate facing bank to retail bank over the last few years. The third stock which we like is ,” says Deepak Jasani, Head, Retail Research, HDFC Securities


What are you picking up in terms of market? Is any particular stock, especially , in focus for you?
Markets are chugging along at this point of time. We have some tailwinds in the sense that the dollar index has been falling over the last few days and in case of interest rates, there is now greater expectations that we are closer to a peak. These two things together have resulted in markets doing well over the last few days and this could continue in the near term.

On the upside, 18,000-18,200 could be a little tough to breach. In terms of results, we have seen top line growth in line with expectations in most companies due to inflationary impact but margins have got impacted and little more than what was expected mainly due to inventory effects.

So in terms of stocks, we have released Diwali picks on October 17 and I would like to highlight three stocks. Out of that one is Bharat Electronics which we like because of its business into defence electronics and also its move into non-defence.

We also like ICICI Bank, which has transformed itself from a corporate facing bank to retail bank over the last few years. The capital adequacy ratios continue to be very good, NPAs are under control and for the entire banking sector, the credit cycle is on the uptick.

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The third stock which we like and which I would like to highlight is Deepak Fertilisers. The company is into nitrite business. It is embarking on two big expansions – one into ammonia and the other into technical ammonium nitrate. The effect of this will start coming from the second half of 2024 onwards. Currently the company is doing well and valuation wise, it is quite attractive.

I understand that you are quite bullish on the entire pharma pack. Would you want to give a detailed view? Also, what are you recommending in the pharma space?
The pharma sector, after underperforming for the last few years due to various reasons, can come back into favour in the coming years being a defensive sector. There are two or three reasons. Pharma can come back into favour because the domestic business has now started doing well; we have come out of the high base effect of Covid. The domestic formulation business across the board has been doing well.

As far as the exports are concerned, I think the pressure on pricing of generics is probably coming to an end and that is why the export business also may revive from here in terms of margins. The USFDA observations have also been quite few and far between and that is one negative trigger which has been playing very slowly or in a few and far between kind of a thing. These three things put together can lead to pharma coming back in favour.

Among pharma stocks,

is our Samvat pick. It is mainly domestic focussed but its export business has also been doing quite well. It is a leading global pharma company and the third largest in India.


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