The global turnover in value stocks is prompting Indian analysts to return to market leaders in sectors most affected by the pandemic – including hotels, aviation, cinemas and banks.
“The risk with larger companies from a balance sheet or funding perspective is lower,” said Aditya Narain, research manager at Mumbai-based Edelweiss Financial Services Ltd. “So it’s best to avoid mid-size and small-sized companies even riding the rally on vaccine developments and economic recovery,” he said. Below are some of the top analysts’ picks in the $ 2.3 trillion Indian stock market. All stock movements are cumulative since the start of the year.
Hospitality: Indian Hotels Co
• “Once the dust settles, we’ll see more high-end leisure and business travel return, rather than mid-range business travel,” said Narain. “If there is a stock that will do better one to two years down the line, it’s probably Indian hotels.”
Analyst ratings: 8 buys, 4 takes, 0 sells: data compiled by Bloomberg
• “The debt ratio of Indian hotels is manageable and they have the backing of the Tata group, so they are well positioned to manage it,” said Jyoti Roy, equity strategist at Angel Broking Ltd. in Mumbai
“The next six months could see some pent-up demand for flights,” said Hemang Jani, chief equity strategist at Motilal Oswal Financial Services Ltd. in Mumbai. “We are bullish on Indigo, the only thing is that after India reopened, the stock has climbed before we even see the numbers on the ground.”
Analyst Notes: 15 buys, 5 takes, 1 sell
Cinemas: PVR Ltd.
• “In these tough times, it makes sense to invest in the best company rather than smaller competitors that seem cheaper,” said Jani of Motilal Oswal.
Analysts’ notes: 18 buys, 6 takes, 4 sells
• This sector has more leeway to rebound relative to others and will see demand pick up after the return of major film releases, according to Roy d’Angel Broking
Financial: ICICI Bank Ltd.
ICICI Bank compares favorably in terms of valuation to competitors of similar size, while its insurance and brokerage units have also performed well recently, according to Jani
Analyst ratings: 54 buys, 0 takes, 0 sells