siddharth sedani: Why Siddharth Sedani is optimistic in the automotive sector
We have seen PSU Bank The index actually kind of outperforms the benchmark, also Bank Nifty for most of the week. Where do you see PSU bank going from here on, do you think they will continue to stay in business well into the future? Among the PSU bank names, do you prefer any other than or because those have been the top favorites for most analysts in the end?
Certainly the PSU banking space will do well in the near term for the biggest reason being profitability. I think margins will expand in the coming quarters because of the increase interest rate the script. It will definitely improve their profit margin in the future. We believe in the PSU banking space as you rightly said that SBI and
are all time favorites and SBI are all time favorites for us also in the same space. But we believe that the PSU banking space is a game with a short term view as many of them, whenever traction appears and builds up in the PSU banking space, will inevitably perform but from a short-term perspective.
Having said that, we believe most in the private banking space with a long-term perspective.
Let us talk about the automotive sector. The passing of the week is also very good for the auto indicator. Second best performing field as it is registered but by next week or by this week we will also have car numbers from 1st November onwards which will indicate how the festive season goes for the automotive sector, assume for that particular space?
We are very active in the automotive space. Starting from the time of Navaratri to Diwali if you look at the passenger car space, sales have increased by 45% with about four thousand cars sold.
So cars have been seeing strong demand on the ground, and test channels show the same thing. But we believe the auto and auto ancillary segments are both quite interesting for us. It will continue to increase. We’ve seen a lot of demand coming in late November, December, also for depreciation benefits etc so I believe the car will do just fine.
Among the automotive spaces in the passenger car space, I think
is a good addition given that M&M is pretty good. In the automotive backend space, we’re pretty positive about Craftsman Automation, and we’re also very positive about the UNO Minda story type. Therefore, we believe that the auto parts that are also added to OEM will perform well in the next two quarters.
As for the whole list of new age and technology platform space type because it is under a lot of pressure, of course it is currently under Rs 1000 mark, below the release price and to add to that you have Delhivery has been under pressure, it’s down 30% in the last one week, one month and you also have other names like, etc., pretty soft in the last week, whether they become buy after correction or you still avoid this space?
Well, I want to avoid the space of not giving a common reason for all share But every company has its own reasons. If you talk about Delhivery, they have internal problems of their ordering and distribution platform where there are a lot of chaotic and tedious processes where systems work and processes don’t, that’s one of the reasons.
Also, Zomato as we know the market doesn’t like the valuation to stay the same so each stock has its own story behind it but I wouldn’t be excited and concerned even though the stock has dropped a lot. I still want to cooperate with those companies, new age businesses like
it’s a more efficient kind of a business model where it is a click, per transaction type of the model. So I want to go out and buy very interesting stories, profit from day one, and have a Accounting balance sheet.
What are your options for next week?
My selections will be based on investments that will be made over the next 9 to 12 months. One is from the banking space,
. It looks quite interesting, the numbers are very strong. I think loan growth is 19%, NIM is better, net profit is up 50%. Therefore, we recommend buying with a target of 150.
In the domestic consumption space, what I like is Polycab. We recommend buying with a target of 3389.
So these two companies look quite interesting. But the unique game from chemical substances is also what I am looking at. Anupam Rasayan is also an attractive buy with a 940 target.
The last stock that I want to talk about is in the FMCG consumer sector, which is
. We recommend buying the stock with a target of 2140.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by experts are their own. These recommendations do not represent the views of The Economic Times)