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    Auto a buy on dips, 3 stocks to bet on: Hemang Jani

    Synopsis

    “Even if we correct another 3% to 5% at the index level, people would be okay given that we have already gone up quite a lot from June onwards. We should just see to it that in this phase, we are able to navigate without much of a damage and look out for some opportunities where the growth visibility is high.”

    Hemang Jani-NEW1-1200ETMarkets.com
    "Tata Motors could go through a bit of uncertainty given their exposure in the UK, China and other markets., Maruti and Mahindra are the two names that we like. Even Ashok Leyland is doing okay. If we see any meaningful correction of about 5-10%, we would definitely find comfort in auto," says Hemang Jani, Equity Strategist & Senior Group VP, MOFSL

    Finally we are aligning ourselves with the global weakness. Of course, we got a long way to go before we completely become at par with the weakness that we have seen US but expiry tomorrow, the MPC outcome the day after and this morning the SGX Nifty is indicating that we are going to significantly breach that 200 DMA of 16,990 on the index.
    The Indian market is being put to test for the outperformance from January or June. Given the veracity of the selloff that we have seen in the global markets and the kind of further development which have happened in terms of possible interest rate hike, we think that it is going to be a bit difficult for us to manage that when the onslaught is so aggressive.

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    If you look at the FII numbers for the past few days, it is about Rs 3,500-4,000 crore. That will be difficult to manage and I think that even in the domestic market, we should be bracing ourselves for another 50 to 75 basis point hike and that will have some repercussions.

    Even if we correct another 3% to 5% at the index level, people would be okay given that we have already gone up quite a lot from June onwards. We should just see to it that in this phase, we are able to navigate without much of a damage and look out for some opportunities where the growth visibility is high.

    What about the Torrent Pharma acquisition of Curatio for close to Rs 2,000 crore? It is in the skin care and dermatology segment. Market analysts are saying that it could be 9% to 5% EPS dilutive for FY23-24 EPS. What is your view on the acquisition?
    It is a fairly large acquisition and in terms of strategic fit, it definitely makes a lot of sense for Torrent Pharma but from a stock market perspective, the valuation appears to be on the higher side because even if you consider the EBITDA that you will be adding to the overall company, you will end up making it a bit EPS dilutive for the near term at least and also we have to reckon that Torrent Pharma has been a little expensive stock in the pharma space.

    We think this acquisition is mildly negative and is going to be EPS dilutive and we may see a bit of a negative reaction. Within the pharma sector, we prefer the hospital space compared to the generic pharma companies or the guys which are focussing on the domestic formulations.

    How would you approach Fortis, after last week’s court judgment?
    That was one of the things the market was getting excited about. Now that it is not going through, the stock also has corrected. Our take is that in the entire space, healthcare and pharma is one space which is going to be relatively insulated and though people will have concerns that Covid related revenue stream could slow down, the overall numbers for some of the hospital companies continue to grow by about 15-18%.

    We think that given the expansion that companies have put in place, the growth visibility will be strong. Apollo Hospital is something that we like and maybe the same could be true for Max Healthcare, where any weakness in the current market scenario, would provide a good entry point for a 15%, 18% kind of an upside.

    In light of this EV launch – Tiago by Tata Motors – where are you finding comfort within the entire auto space? A lot of these stocks have come under a bit of pressure. Do you think it is a ripe opportunity to buy or still need more correction?
    After showing a very strong outperformance in the last six to nine months, we are seeing some correction across the auto names. Our view is that Tata Motors could go through a bit of uncertainty given their exposure in the UK, China and other markets. That is something which we would avoid in the current scenario but otherwise, Maruti and Mahindra are the two names that we have been liking. Even Ashok Leyland is doing okay. If we see any meaningful correction of about 5-10%, we would definitely find comfort in auto.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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