Gautam Duggad, head of research-institutional equities at Motilal Oswal Financial Services, on Wednesday said that valuations in the paint sector are rich.
“The structural factors that drive the paint growth in India are as relevant today as they were a decade back. However, valuations are expensive, so this is a sector which is suitable for somebody who has a long-term orientation,” Duggad told CNBC-TV18.
Talking about the auto space, he said it is expected to contribute to earnings growth going in FY23 after staying absolutely flattish for the last 3-4 years. “In fact, in FY18, the peak earnings of the Nifty auto companies was Rs 30,000 crore. We are ending FY22 or expect it to end with about Rs 17,000-18,000 crore of earnings and then it’s expected to do Rs 40,000 crore of earnings in FY23,” he said.
He further said the model portfolio is tilted towards cyclical. “Titan, which has been the part of the model portfolio for 6-7 years remains the number one preferred discretionary idea for us. Financials is a sector where valuations are reasonable. The absolute underperformance that we have seen in financials and earnings has been solid. So, it remains an overweight for us,” Duggad said.
For the entire interview, watch the video