ET Now: What is your opinion on the car basket and specifically?
Neeraj Dewan: Valuing wise what Maruti has averaged over the last 10-15 years it has traded above that, hence the comfortable valuation, which has been there before in auto stocks. , especially Maruti, so I really prefer Mahindra & Mahindra in this location where pricing wise, it’s much more attractive than Maruti’s location. They have a very good rate of return. ROC is strong and the numbers are strong too, and you will see that margins also improve in the future as commodity pressures are also reduced, so in the four-wheeler category I would absolutely love Mahindra & Mahindra is better because it’s better, the kind of growth we’re seeing there and the pricing comfort there.
ET Now: Are you convinced to buy any average capitalization in today’s market?
Neeraj Dewan: Yes, definitely. There are still opportunities there. One such sector is the construction and infrastructure sector, which I don’t think you’re trading at a high valuation right now. There are still stocks that trade below their average multiples, and certainly have a good order book.
Some infrastructure stocks have order book sales almost 3 times last year and some of them even 3.5, 3.7 times sales last year, so there are Good order book plus increased execution in the second half of the year. So this quarter and the next could be very good for some of these companies plus profit margin improvements are also possible – one is due to execution; second, because the commodity pressure there is also easing I think it’s a space where one could consider good mid cap bets.
The other area should be the NBFC space, where we’ve started to see some movement. There, I think, after the bull run that we saw first in the private sector banks and then in the PSU banks. If you look at the pricing at all, some of the NBFCs are also very attractive and we don’t even expect too many rate hikes to come, so with that background the valuation should also be quite attractive for a number of this name, so we are looking for opportunities in this field.
ET Now: What would you choose from the entire insurance basket?
Neeraj Dewan: I think the kind of returns we expect in the next 1-1.5 years, I don’t think they’ll outperform if you compare it to other bank stocks and the NBFC space, I think there will be if one has to pick up insurance I think
would still be a better bet. I think you could see better growth there as car insurance and motorcycle insurance could really benefit them, so that would still be my top pick there, but I still prefer to stay with banks and NBFCs that can benefit them. better returns from these levels over the next year, a year and a half.
ET Now: ET Now: Do you believe that defensive bias against the kind of volatility we’re seeing is a good stepping stone?
Neeraj Dewan: I think after the Covid protest we’ve seen in most pharmaceutical stocksthere’s been consolidation, minus some big names and probably still doing better, but if you look at Divi’s, which has been doing much better in the last two or three years, I think it’s going to be consolidation. at these levels.
For most of the pharma space, there are still a few quarters left to see some consolidation and some clarity on what’s happening with the product portfolio as Divi’s also says that the product category is related. previously related to Covid is now moving to their other products. Generic name and long-term treatment to consolidation, that change, the transition is happening now and next quarter. In this and next quarter, people will have those same long term opportunities to invest in pharmaceutical names again, but I think generally investing in them now for a good return in 6-months. The next eight months look tough. I think they will still consolidate some more to give you better returns in the future.