Opportunities lie in midcap cement space; prefer Prism, Heidelberg: Harendra Kumar

In a chat with ET Now, Harendra Kumar, Managing Director, Institutional Equities, Elara Capital, shares his investment ideas.

ET Now: Assuming that there may be a 5-10 per cent more downside to the market, which are the pockets where you would essentially be looking to buy into?

Harendra Kumar: Respective of the price points, we see opportunities in consumption, discretionary, telecom and cement spaces. The cement pack has started to underperform the Nifty over the last three months. But structurally, we are very positive on the cement stocks from central India. There lie large opportunities and the availability of limestone is limited in the region. The dedicated freight corridors ends around that area. There are big opportunities in terms of demand from both highways and housing projects. Prism and Heidelberg are our two preferred picks.
These companies are trading at around $70 EV per tonne, whereas some of the larger ones are higher valuations.
We have seen that as the capacity utilisation levels of cement makers pick up and the margins shoot up, valuations multiples go through the roof. Therefore, the midcap cement pack is where the opportunity lies and we like the two stocks that I mentioned.