Rahul Shah on 3 top stocks to bet on for defence, capex play

“BEL, which remains our top bet in terms of defence play, has done quite well. It still remains our top pick in that space. Secondly, names like HAL have already flared up quite a bit in the last six months or so. But that still remains a good theme going forward. In terms of capital goods as capex play, Larsen & Toubro remains our top bet,” says Rahul Shah, VP-Equity Advisory, MOFSL

Is there anything from railways or the larger capital goods space that interests you and you have a buy call on?
As of now, no, nothing from the railway space. We have not been covering very actively from that perspective. So I will not be able to comment on that space.

Coming to the capex theme, is there anything that you want to call out, at least in the defence space?
The defence space has given 50% or more in a few stocks in the last six months or so. I think names like BEL, which remains our top bet in terms of defence play, has done quite well. It still remains our top pick in that space. Secondly, names like HAL have already flared up quite a bit in the last six months or so. But that still remains a good theme going forward. We will continue to remain bullish on these two stocks in terms of defence play.

If we talk about capex, then in terms of capital goods play, Larsen & Toubro remains our top bet.

So these are the three names which we have been looking at from this perspective.

If China is opening up, Chinese markets are making a comeback and if Chinese related ETFs are getting flows back, then metals as a category should start coming back. If China opens up, they will start consuming and guzzling steel, iron ore, copper, nickel everything?
I agree with you. The corporate earnings this quarter reported by most of the metal companies were discouraging and the entire Nifty earnings has taken a hit. My sense is that we will see that all these metal stocks will continue to remain under pressure when we come out with the Q3 earnings.

Secondly, the Chinese getting back on the rolls will make the situation better for some metal stocks. The numbers have been bad for the metal companies. People will still wait for Q3 earnings. My view is one should avoid bottom fishing in any of the metal stocks and any bounce back should be used as an exit at least for the near term future.

Sugar is perhaps the only commodity where the uptrend is evident. Companies like Balrampur Chini and Shri Renuka have advantage of both ethanol and sugar. Do you find the space exciting?
All our commodity stocks, at least agri commodities, have done very well in the last one year. Talking about the sugar space, Balrampur Chini being the largest player remains interesting for us. So from this space, I would bet on Balrampur Chini rather than playing any other sugar stocks.