Motilal Oswal’s Siddhartha Khemka is positive on Bharti Airtel: Here’s why

Bharti Airtel is the top pick in telecom sector for the next 2 years, said Siddhartha Khemka, Head-Retail Research, Broking & Distribution at Motilal Oswal Financial Services.

Speaking to CNBC-TV18, Khemka said that prices are stabilising in telecom sector and Bharti Airtel’s operations have been strong sequentially.

“We believe that Bharti Airtel is the best placed in the telecom space. Balancesheet is strong and free cash flow generation over the next 2-3 years is something that we are positive on. Finally the market share gain that they are doing, both in the telecom and broadband space, should help the company for the next 2 years,” he said.

Within the banking sector, Khemka likes ICICI Bank. “We expect the company to show strong growth mainly focused on the retail segment. The company is comparatively trading at a lesser valuation compared to some of its larger peers and we expect return ratio to improve significantly going forward to about 2.5 percent while the stock is trading less than 2 times price to book on a forward basis. Hence we believe that the stock could see significant re-rating plus the growth on core earnings which should drive the stock price for the next one year,” he said.

From the consumer space, Khemka said that given the current market environment, it is good to stay with market leader like Hindustan Unilever (HUL).

“If you look at the broader consumer space, our top pick in the largecap has been HUL and the second preferred choice has been Tata Consumer. We have been positive on Tata Consumer for quite a while and it has delivered. But in this given environment where the market is trading near highs, we believe it would be better to stick with the market leader."

According to Khemka, strong liquidity is supporting the market. He also doesn’t expect a slowdown in institutional activity which will support the market momentum in the near term.