What are you making of this very range-bound trade that we have been stuck in for a while now? At the same time, once again, it is the broader markets wherein we are seeing movement and today unfortunately it is quite down. Where will the largecaps find the next set of triggers from?
Mayuresh Joshi: The markets are reacting in terms of the geopolitics, specifically what’s happening in West Asia. But there is some hope that if any news comes through in terms of de-escalation over the next few days, something which probably is assuming that the worst in terms of the conflict might be behind us, we will definitely come out of the range-bound trade that we are in.
Obviously, within largecaps, the construct still remains positive in terms of select leadership BFSI stocks because the space generally looks geared up in terms of better earnings growth. Obviously, OMCs in the oil and gas space, become more of a tactical trade as we speak. But generally for largecaps, the mood has been pretty sanguine so far. It is the midcaps where the entire action might be over the next few quarters as earnings start coming back. So, midcaps and select leadership stocks might fare well where earnings are expected to hold up at least in a domestic context for the next few quarters.
Within this lot of sector churning that is underway, which sector is poised for a good recovery? We just concluded the earning season as well. Is there any sector you will be watching closely for the next couple of quarters wherein earnings and valuation support can take the stock prices higher as well?
Mayuresh Joshi: Healthcare as a space is where we believe stocks can do well selectively. Within healthcare, hospitals as a space has delivered a very decent set of numbers as far as Q4 is concerned and our take is that the asset light model that a lot of hospital stocks are embarking upon over the last few quarters has started yielding results both in terms of the average revenue per operating bed as occupancy rates are inching higher.
We are probably seeing the average length of stay coming down as hospitals mature. And therefore, hospitals within healthcare as a space is where the earning stability might continue and a lot of hospitals are showing that earning strength specifically in their price strength as well as we see it in Marketsmith India. So, the ratings, rankings, institutional holding – all the elements that we follow, are getting exhibited in this space.
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Certain hospital stocks like Kims, Fortis Healthcare, Narayana Hrudayalaya are where earning stability might continue over the next few quarters. The other space is obviously within BFSI where we have seen some strength in NBFC stocks. Our view is that select NBFC stocks might continue doing well. Therefore, in a falling interest rate scenario with the RBI frontloading 50 bps of rate cuts, the expectations is that in terms of stronger franchises with a better diversified borrowing mix, a better advanced mix, better capital adequacy and therefore a better take in terms of the overall balance sheet growth leading to better RoEs and ROAs, they can continue doing well. So, stocks like Shriram Finance are something we continue holding in our domestic and global portfolios. Last but not the least, a few of the consumption-driven stocks. With better monsoons, rural, semi-urban consumption which has started coming back should come back even more strongly in the second half and therefore for a few apparel makers Vishal Mega Mart, which just concluded a big block deal, V-Mart Retail, the same-store sales growth (SSG) has been pretty decent for these companies. It is a good mix for apparel, FMCG, and non-FMCG, the price points are appropriately placed and in tier II, tier III cities where the expectation is that if growth rebounds very strongly in terms of discretionary spending, these guys might benefit quite significantly on all parameters that we probably put through and therefore rating and rankings look superb. So, Vishal Mega Mart, V-Mart might be a couple of ideas on the semi-urban/rural discretionary spend which can exhibit better volume and price moves as far as balance sheets are concerned.
