stocks to buy today: 6 real estate and capital goods stocks to bet on: Rahul Shah
We are watching Infosys closely and the street is drawing in that the revenue forecast will be between 13% and 15%. Dollar revenue growth increased 3.9% in cross currency terms and margins are expected to decline. What do you expect from Infosys?
The way most IT companies provided their fourth quarter numbers and the way the TCS numbers turned out, we expect Infosys’s numbers to be in line with Street’s estimates. Orientation is more important on the front of the margins.
In today’s market session, we see the IT midcap shining again. Infy’s numbers should be more in line with what the market feels. There will be no big surprises. But the most important thing to focus on is management commentary and advice on moving forward from here.
How do you see the buzz in the real estate basket? The Street is betting on a revival. What would you attribute it to?
Most real estate stocks hit their highest level in 52 weeks. Real estate is a demand driven market. After a long, long time, we saw this kind of demand coming in. My take is that the big players are going to be the best bet in terms of how they are going to benefit in terms of the bottom line. But stocks seem expensive and they will be. Among the larger cap, high PE stocks we like.
Prestige Estate is another stock that we love. Other stocks may have underperformed most other stocks. So there could also be a 15-20% increase to catch up in Prestige Estate. Third, other small names like
and the world’s Kolte Patils could also see a good move from current levels. It will be fine in the future as well, but to add to that housing finance companies (HFCs) should be very attractive as well.
If the real estate industry is doing well, HFCs should do well as well. My preference is for big names like HDFC Limited which has relatively underperformed the market. In the mid-sized space, I would like to bet on Can Fin Homes which has a fairly good balance sheet and very good asset quality.
Zomato’s IPO opens tomorrow. Is it a subscription or not?
These are all new age companies. If we didn’t get involved in these kinds of new age businesses, we wouldn’t be making money out of them. I am for a subscription. From a valuation perspective, the stock looks expensive. Stocks will remain expensive and there will always be a first-mover advantage in entering these kinds of businesses.
So I would ask investors to ask for it not only for the earnings listed but also maybe keep it a bit to see how the business is shaping up and what other new categories these new age companies are falling into.
In the capital goods space, which companies do you think will see a recovery in profits this quarter?
The entire capital goods industry, starting with companies like L&T, is a priority for me. L&T could give at least 20% advantage from here, followed by
and. These are the three stocks that I think should benefit, but L&T should be the best beneficiary.
Where do you stand on the whole insurance game? Is SBI Life the most valued?
We should play insurance like a basket. This sector will continue to remain expensive. I think over the next couple of years, insurance companies will continue to grow and at a faster rate. SBI Life is followed by Max Life which is relatively less expensive in terms of valuations and the leader HDFC Life as well. I would create a basket of the four companies which are the highest weighted listed players on SBI Life and with ICICI and HDFC in the portfolio as well.
If you had to choose some of the big names in the automotive space that could see a long-term recovery with the impact of the pandemic taken into account, what would you look at?
In the automotive space, passenger vehicles would be the best way to play. Maruti is a stock that I would look at. In terms of valuations, it is expected to grow from current levels. Second, obviously we’ve heard a lot of fuss about semiconductor chips over the past couple of weeks. In this space, I would play on the rural recovery with M&M because it is relatively less expensive in terms of valuations. There could be another 15% hike in M&M.
So these are the two great players that I will choose. Second, if I have to play for the global recovery, in passenger vehicles, Tata Motors is one of the best games. But obviously there is a correction and the title could stay under pressure for a few weeks or maybe months. But if you have a longer time horizon of a year or more, then this is one of the stocks you should have in your portfolio.