Sonam Udasi, Fund Manager at Tata Asset Management is of a clear view that if one is keen on having an exposure to Indian financials then they must park their money in leaders within that space while on the other hand one can look at trading in some of the names.
Speaking about the overall market and valuations he said, “My personal view is that from the Indian context, largecaps will continue to get larger. There might be a quarter or two of disappointment in terms of valuations etc but the way the cash flows are being managed by the largecaps and the leaders will still come at a premium whichever sector you look at."
"It will take a lot of catch up for the broader market for value to become the only thing in town. So you are seeing a rally in the so called value zone but I suspect that it will take a little bit more that where it is today. So, we are looking for value qualitatively and not really deep value bombed out sort of names or sectors,” he said in an interview with CNBC-TV18.
While regards to consumer stocks Udasi said, “Within that basket the one that is the largest (HUL) is showing the biggest amount of visibility relatively speaking. I think they will still be able to deliver 5-6 percent kind of volume growth over the next few quarters."
According to him, the commodity tailwind is still with them, gross margins are good and also there is a GSK Consumer merger that is happening. So, on a console level this entity can still deliver a 14-15 percent kind of earnings growth next three years. The current overhang on the stock is related to what Glaxo might do with their Lever shares. "Structurally, if I have to look at consumer for the next 1-2 years I think Hindustan Unilever looks well set,” said Udasi.
When asked about the banking stocks he said, “For us the view was who has the balancesheet which can actually participate in a revival if it comes in and who can fund either retail growth or corporate growth.
"So, whichever bank we felt did not need capital to grow itself in this market, we felt that those were the ones that should do better because either their pricing power will go up or they will have incrementally high market share., " he said.
For now, within PSUs we will stick with the largest but structurally whenever that revival will happen I believe the guys who have got the balancesheets will have a higher market share.”