Why Nischal Maheshwari is gung-ho on SBI and ICICI Bank

In the auto sector, tractors and CVs are the favourites for the next two quarters, says Nischal Maheshwari, CEO-Institutional Equities, Centrum Broking.

On financialsstock
Among financials, the corporate banking side is going to remain positive for the next two years, especially banks which have faced NPA issues, with recovery happening in the cycle. These banks are going to be major gainers in the next two years. So, ICICI Bank and SBI would be the favourites as far as banking is concerned.

On Bharti Airtel

As far as the telecom space is concerned, this is part of the utility space where it requires regular investments. But these investments are huge and now the bidding for 5G spectrum auction has started. This is a cycle which happens every two-three years because of technological changes and on top of it, a price war is continuing and Reliance has come up with a new package where the prices are lower. Bharti now has to either match it or do something better. That is where the market is getting disappointed with the whole space. Valuation wise, Bharti is in a good spot but this is where the problem remains and people are not seeing the end of it. That’s why some of the investors are getting out of that space.

On PSU stocks
Other than SBI, we like SBI Cards. We like the oil marketing companies because they are very cheap and some of the gas companies like IGL and MGL. MGL is available at half the valuation of IGL. We are very selective in our space and that is why we are looking at some of these stocks but none of the others, where we have seen a huge amount of runup in the recent times. I do not believe those are stocks one should be having in their portfolios for investment. But they are good trading stocks.

On auto sector
Tractors seem to be doing the best if you look at the current month’s numbers. CVs are doing better because in the last nine months, nothing much has happened in the CV space. We are starting to see a recovery on the back of a good economic cycle. Two- wheelers are facing a semiconductor issue. There is a supply side glitch. We were talking to Hero Honda people and they were saying that supply is an issue and that is why they are not seeing the good numbers but scooter seems to be taking off as far as two-wheelers are concerned. Four-wheelers are coming back on the back of good demand and on the back of recovery happening and on the back of need for personal mobility. So, tractors and CVs are the favourites for the next two quarters.