Further good news from Tata Motors as they have completed the acquisition for India’s Sanand plant as well a buy now after the massive underperformance that we have seen pretty much all through last year?
I think finally some good news coming through for Tata Motors. More than this Sanand plant acquisition, the combination of the positive news flow on JLR, some commitment from the management about the free cash flow generation and the revival that we are seeing in the CV business and the passenger vehicle where has done a remarkably good job in the last two years are responsible for this positive sentiment.
I think there is a scope for about 7% to 10% kind of an uptick in Tata Motors even from the price at which it is trading today.
What do you make of this JP Morgan downgrade which is coming in. They put a target price of 710 which is okay this is I think where the support for the stock was, but they are expecting negative surprises on the capex, they expect competitive 5G roll outs to gain momentum and they are saying that battle for premium smart phones subscribers is going to way heavy on ?
It is one of the best performing sector. I think the incremental growth is going to come from 4G to 5G and the premium customers that you have. So we think that given the aggressive positioning that these two companies have taken in terms of pricing, the revenue growth or the ARPU growth can moderate. If you look at Bharti’s balance sheet because of the kind of capex that they have done, it is not looking that strong compared to what it was may be a year-year and a half back.
So I think there is a case for some sort of a consolidation in Bharti stocks from where we are. It may go through a bit of a correction but I do not see a case for a significant downtick purely on this because at the end of the day the overall ARPU growth story continues to remain intact and that would give some support to the stock.
Apart from SBI which is the strongest PSU bank? Let us keep out of the equation because that is an outlier I mean it will get a yes by everybody?
Yes, so our take is that BoB and
are the two names where we are seeing a lot of comfort in terms of valuation and growth that they have been delivering. We have not been going beyond that because we think that you may have a patch where some of the smaller PSUs can create excitement and people may find them attractive but what we have to remember is that these companies have always been quoting at a 0.3-0.4 price to book just because they are still quoting around that level does not mean that the people should go for it.I think having some sort of a cap on what sort of exposure you are taking when it comes to PSUs would definitely be advisable. This is because when you are going through a turbulent time and 2023 right from the beginning looks like it is going to be a difficult year to navigate, we have to remember that what kind of exposure in which kind of sectors and stocks you are taking exposure. That becomes very crucial so we would avoid high beta low quality names when it comes to this year.
Where is headed as a stock it did give this hope let us say in October-November that it wants to make a new high do you think it could be the stock of the year?
I think with two important launches coming up this year it should be able to go back to a market share of about 44-45% and given the fact for the SUVs in the compact SUVs and even for the premium ones the waiting period is still very high which means that there is a lot of demand which boards well for Maruti. And the yen related pressure which was there may be a month back that has actually cooled off so we think that yes this is going to be one of the better performing stocks, it is a better demand visibility and good product launch pipeline but do not expect blockbuster return from the valuations at which it is trading at.
What 2023 could bring for L&T?
Capex and capital goods is a very big theme and we think that this may go on for some more time. You have Budget around the corner and government is far more aggressive in terms of putting more outlay for capex and infra. Even with the private sector we are seeing definite signs of turnaround which is good for L&T. It also has small component of defence where there is a lot of action happening so we would definitely have a positive view on L&T as well as some of the other capex related themes like maybe , , some of the defence stocks. We think that this year would definitely be a good year for this sector.
We want to talk about those which are selling passenger cars, what would your pecking order be?
We would definitely go with Maruti as our first pick followed by Mahindra & Mahindra because I think even for Mahindra the pipeline and the overall turnaround that they posted is extremely good. You also have some positive triggers coming through from the tractor side so these are the two names that we would prefer when it comes to passenger vehicle.
Let us get either a buy or sell idea from you.
So two names we like at this point. One is Samvardhana Motherson, the auto component company. We have seen a good amount of turnaround across the auto industry globally particularly passenger vehicles and given the kind of transformation that Motherson has carried out, we think that it is extremely well positioned. So we are extremely positive on this one. And the other one is
. I think the dominant position that this company has on the and the overall growth that we are looking at for the next two to three years, this could be one interesting stock to look at when it comes to midcap space.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
