Still bullish on the OMC space: R Sreesankar, Prabhudas Lilladher

Talking to ET Now, R Sreesankar, Head Institutional Equities, Prabhudas Lilladher, says other than BPCL and GAIL, also likes IGL, MGL – the city gas distributors.

Edited excerpts:


You continue to like the prospects of Eicher Motors. Why are you still positive on this one?

We have an accumulate on Eicher. It is not a part of our top picks. So, from an overall perspective, we continue to like that entire space. Growth is there and we also believe that we do not look into these monthly auto numbers to a certain extent.

We believe that FY18, the whole year, is going to see a huge amount of volatility in each quarter. Right now, the third quarter is doing exceedingly well on a YoY basis. There was demonetisation in FY17 and in the fourth quarter, there were demonetisation effects. In the fourth quarter of the current year, in the medium and commercial vehicle segment there is a shift towards higher tonnage vehicles which is probably adding into the MHCV space in a much better manner.

Also, we think that slowly but steadily, the infrastructure related growth that we have seen will lead to the growth in that particular segment.

What is your view on the oil and gas space particularly BPCL where you have a buy with a target of Rs 553 and GAIL where you have a buy with a target of Rs 534?

We continue to be optimistic on that space. The only problem is sometimes when the crude oil prices go up quite sharply, you may see a correction in the oil marketing companies. You have mentioned only two stocks out there -- BPCL and GAIL. In the gas space, we like IGL, MGL – the city gas distributors.

Coming to GAIL, from a long-term perspective, it looks good to us. The only thing is that in last quarter, the kind of margins that we were expecting from the oil marketing companies, oil companies were the actuals were lower than what we had anticipated that was one disappointment which we had for the last quarter in terms of performance otherwise our views still continue to be optimistic only.

What do you like within the pharma pack?

We continue to have a buy on Aurobindo Pharma. That is one of the stocks that we like in that particular space. Aurobindo is a best pick in that segment and Thyrocare Technologies from the lab space. So, Aurobindo has been a pick for quite long time and still continues to be one of our top picks.