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    Vaccine bets have analysts favoring sector leaders in India

    Synopsis

    “The risk with the biggest companies from a balance sheet or funding perspective is lower,” said Aditya Narain, head of research at Mumbai-based Edelweiss Financial Services Ltd.

    covid vaccine
    By Ronojoy Mazumdar

    The global rotation into value shares is prompting analysts in India to circle back to market leaders in sectors worst-hit by the pandemic -- including hotels, aviation, cinemas, and banking.

    “The risk with the biggest companies from a balance sheet or funding perspective is lower,” said Aditya Narain, head of research at Mumbai-based Edelweiss Financial Services Ltd. “The leader has the greatest wherewithal to hang in there if business remains modest,” so it’s better to avoid mid-sized and smaller companies even while riding the rally on vaccine developments and economic recovery, he said.

    Below are some of analysts’ top picks in India’s $2.3 trillion equity market. All stock moves are year-to-date.

    Hospitality: Indian Hotels Co. (-21%)
    • “Once the dust settles, we will see more leisure travel and high-end business travel coming back, rather than mid-range business travel,” said Narain. “If there is a stock that will do better one-to-two years down the line, it’s probably Indian Hotels”
    • Analyst ratings: 8 buys, 4 holds, 0 sells: data compiled by Bloomberg
    • “Indian Hotels’ debt-equity ratio is manageable and they have the backing of the Tata group, so are well-positioned to handle it,” said Jyoti Roy, an equity strategist at Angel Broking Ltd. in Mumbai
    • Analysts' picks are all beating the benchmark gauge in November

    Airlines: InterGlobe Aviation Ltd. (+27%)
    • “The next six months could see some pent-up demand for flights,” said Hemang Jani, head equity strategist at Motilal Oswal Financial Services Ltd. in Mumbai. “We are positive on Indigo, the only thing is that after India’s re-opening, the stock has run up even before we see the numbers on the ground”
    • Analyst ratings: 15 buys, 5 holds, 1 sell

    Cinemas: PVR Ltd. (-31%)
    • “In these difficult phases, it makes sense to invest in the top company rather than smaller rivals who look cheaper,” said Motilal Oswal’s Jani
    • Analyst ratings: 18 buys, 6 holds, 4 sells
    • This sector has more headroom to bounce back compared with others, and will see demand recover after the return of big movie releases, according to Angel Broking’s Roy

    Financials: ICICI Bank Ltd. (-11%)
    • ICICI Bank compares favorably in terms of valuation with rivals of a similar size, while its insurance and brokerage units have also performed well recently, according to Jani
    • Analyst ratings: 54 buys, 0 holds, 0 sells



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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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