Smaller companies could see a harder hit on margins compared with leaders in the same sector, Saurabh Mukherjea, Founder of Marcellus Investment Managers, told CNBC-TV18.
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“There is a need to track the rising input costs across sectors that could hit margins, said Mukherjea.
Meanwhile, he believes large IT names such as TCS or Infosys are much better plays to deal with a strong demand environment but with rising salary costs.
“A TCS or Infosys is much better placed than a mid-rung IT services stock. It is clear that there is a massive wave of digitisation in the Fortune 500 companies and Indian IT services firms are driving that process. We have been holding TCS for the last three years,” Mukherjea said.
Specialty chemicals have been Mukherjea‘s favourite over the last three years amid a strong demand environment.
In his portfolio, Mukherjea said he holds GMM Pfaudler, Alkyl Amines Chemicals and Fine Organics Industries.
“We are looking to see whether we should add more because, in this sector, we do see pricing power,” he said.
From the financial space, he has added Cholamandalam Investment and Aavas Financiers.
“For the recovery, our favourites have been financial services stocks. High-quality lenders will remain one of our favourite places to play the recovery. If I have to look beyond the frontline financials, we have added AAVAS Financiers and Cholamandalam Financial Holdings in our portfolio” he said.
Further, Mukherjea said he sees huge potential in Titan Company from here on. The company has a low cost and is a tremendous franchise to own, he said.
On diagnostics stocks, he said the space has a huge scope in the post-coronavirus era, and most of these businesses are unorganised. He believes diagnostics companies have a good tailwind for the next few years.
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