Metals mid-cycle, FMCG a sell-on-rallies; platform firms are new consumption play: Dipan Mehta

Indian equity markets are offering selective opportunities rather than broad-based upside, with investors needing to be cautious on overheated sectors while positioning for long-term structural trends, according to Dipan Mehta, Director at Elixir Equities.

Metals: Stay invested, but avoid fresh aggression

Mehta said metal stocks have been star performers over the past several quarters, driven by rising global commodity prices and rupee depreciation. However, he cautioned that the sector is no longer in a down cycle, making fresh entries risky.

“This is a mid-cycle for metals. If you are already invested, you can stay invested, but at current levels I would be neutral and cautious,” he said.


Among metals, Mehta remains structurally positive on non-ferrous commodities such as copper, aluminium and zinc. He highlighted Hindustan Copper as a stock to watch, citing its large expansion plans, though execution risks remain. If volume growth materialises over the next three to four years, he believes the stock could still deliver strong returns despite rich valuations.

FMCG: Safe haven, but poor long-term returns

While acknowledging renewed interest in FMCG stocks as a defensive play, Mehta said most categories have matured and no longer offer compelling long-term growth.

“There could be a short-term trading rally due to base effects and lower raw material costs, but from a long-term perspective FMCG is a sell on every rise,” he said.

According to Mehta, India’s consumption basket has evolved significantly over the past decade, creating better opportunities outside traditional FMCG.

Quick commerce is the “new FMCG”

Mehta described platform-based quick commerce companies as the new face of consumption in India. He said businesses such as Swiggy and Eternal represent long-term structural growth opportunities despite current valuation concerns.

“These are five- to ten-year plays. You should not buy them with a one-year mindset,” he said, adding that investors could gradually allocate to such platforms at the expense of legacy FMCG stocks like HUL or Colgate.

He believes these platforms have multiple growth levers, including category expansion, improving unit economics and rapid penetration into tier-II and tier-III markets.

QSR faces structural pressure

Mehta remains underweight on the quick service restaurant (QSR) segment, saying food aggregators have disrupted the industry’s fundamentals.

“Same-store sales growth has been disappointing, and profitability remains a challenge. There may be occasional trading rallies, but I do not see strong secular growth,” he said.

IT services: Watch for selective winners

On technology stocks, Mehta highlighted Persistent Systems as a standout performer, noting its consistent high-teens growth even when the broader IT sector struggles.

While valuations remain expensive, he said long-term investors could consider accumulating the stock on corrections. He also cited improving commentary from LTIMindtree, suggesting green shoots across parts of the IT services space.

Commercial vehicles: Prefer Ashok Leyland

Mehta said the commercial vehicle (CV) segment is in a cyclical upswing, supported by improving economic activity and industrial growth.

While he remains invested in Tata Motors commercial vehicles, he prefers Ashok Leyland for its consistent performance, market share stability, export exposure and EV positioning.

“Auto as a sector should remain overweight, whether tractors, CVs, passenger vehicles or two-wheelers,” he added.

Specialty chemicals: Long-term bullish

Mehta expressed a positive long-term outlook on specialty chemical companies, citing benefits from rupee depreciation, capacity expansion, backward integration and rising global relevance.

He remains constructive on SRF, saying demand recovery may take another quarter, but long-term growth prospects remain intact.

“These companies are becoming global leaders in niche products. If you hold them long enough, returns can be meaningful,” he said.