Macquarie has recalibrated its Super 6s buy ideas list in its India Strategy in a new note. The brokerage has swapped three global facing names with relatively insulated domestic names to better navigate the current market conditions.
This pivot aims to leverage local market strengths, while mitigating global exposure risks, following US President Donald Trump's global tariff imposition.
Here is a look at the new inclusions and exclusions.
Inclusions
Bharti Airtel: Macquarie sees Bharti Airtel as the best 'flight to safety' large-cap holding. The company has high visibility in India with Return on Invested Capital expected to improve from 10% towards 20% by FY28E.
Higher Average Revenue Per User is driving further margin expansion and robust Free Cash Flow across various modeling scenarios.
UltraTech Cement: The cement sector is well-placed with secular demand growth, recent industry price hikes, and potential input cost moderation.
UltraTech Cement is positioned with industry-leading volume growth, balance sheet deleveraging, and cost optimisation through higher usage of green energy and lead distance optimisation.
GAIL: Tactical upside is seen from a 10-30% hike in transmission tariffs for the core pipeline business by June.
GAIL also offers support from a 4% dividend yield, while its core two-year forward price to equity is nearly half of MXIN. Any signing of a new LNG contract with the US could reduce volatility and be positive for the company.
Exclusions
Sun Pharma: Despite remaining positive on Sun Pharma, Macquarie acknowledged the stock's volatility due to its high exposure to the US market.
In the medium-term, the company is expected to experience a structural shift in its earnings mix towards branded businesses, including Global Specialty, India, and Emerging Markets branded segments.
Tata Motors: The tactical preference for Tata Motors was based on JLR's near-term cash flow visibility and strong earnings momentum.
However, increased uncertainty to JLR's cash flows due to the company's decision to halt supplies to the US has led to increased earnings risk.
Wipro: Wipro was included in the tactical list, with expectations of higher dividend payouts and growth pickup. However, uncertainties regarding the near-term impact on growth due to tariffs mean potential downside in the near term.
The tariffs imposed by US President Donald Trump on India have created uncertainties for companies with high global exposure. These tariffs have led to increased costs and disrupted supply chains across economies.
Companies like Wipro and Tata Motors, which have substantial operations and revenue streams tied to the US market, are particularly vulnerable to these changes.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
