Betting on festive demand? Go for these 2 NBFCs

Post HDFC commentary, the entire financial pack, the entire banking set looks interesting.

ETMarkets.com
NBFCs have seen a great run of underperformance. So, selective NBFCs could be an indirect way to play on the rural economy theme, says Rahul Shah, VP-Equity Advisory, Motilal Oswal Financial Services.

There is news that Flipkart is buying 7.8% stake in Aditya Birla Fashion for Rs 1,500 crore. What do you make of the deal buzz?
The deal is a win-win for both Aditya Birla as well as Flipkart. Obviously the deal has happened at a little bit premium to the market price and that is good for shareholders.

What is the best way to bet on the festival season demand?
My personal bet would be financials. NBFCs have seen a great run of underperformance. So, selective NBFCs could be an indirect way to play on the rural economy theme. M&M Finance is one stock one should look at. They will post their results on Monday.


LIC Housing is another stock. It is available at very reasonable valuations and after HDFC, I think this is the only company which is borrowing at very low rates. NBFCs could take a good runup from here and post HDFC commentary, the entire financial pack, the entire banking set looks interesting.

Kotak Bank is going to deliver its numbers on Monday. What is the broad expectation here?
The most important thing to look at in the entire banking space is the management’s commentary. We want to know how they are looking at the outlook post moratorium in the coming two quarters and whether the growth is going to be from retail or from wholesale banking. This is going to be an important aspect rather than looking at the numbers prima facie. So this quarter, Kotak’s numbers should be in line with what HDFC Bank delivered. I do not think there could be any major surprises in Kotak from current levels.

What is the best way to play on the auto recovery?
With its product mix and dealer network, Hero is one of the best bets to play on the auto theme in the two-wheeler space. We have seen a very spectacular rally in Hero but I still think there could be some more upside in the stock with the festive season coming up and the way the management thinks about it.
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