HDFC Securities bullish on IT, pharma and infra for 2017

Mumbai: HDFC Securities said at an event on its market outlook for 2017 that it is bullish on Information Technology, Pharmaceuticals and Infrastructure sectors. According to the brokerage the bad news on digital disruption and Trump is mostly in the price and a strong dollar and US macro revival will spur IT spend by banks and corporates. It said companies are cash rich, but face growth challenges. Valuations are moderate it said and expects significant OPF over the next 12 months.

Pharmaceuticals are currently reeling under regulatory crackdown the brokerage said “Hardly any frontline co has escaped moderate to serious pressure from the USFDA.” But added the valuations are running lower than multi year averages, even as product filings stand at a multi year high. It stressed that Trump’s emphasis on reducing healthcare costs will lead to faster approvals for generic filings. “There is no serious global competition for Indian cos barring Israel,” the brokerage said.

Within the infrastructure sector it prefers pure play EPC companies – such as roads, power transmission, ports, railways, urban infra, buildings. It said the these spaces look very attractive as public sector (NHAI, Powergrid, Transcos, Discoms, Metro Rlys, Municipalities bodies) order flow is set to rise on a high base, competition is low and confidence on execution is rising.