Q2 Earnings Season Best In Last Six Quarters, Says Gautam Duggad
Certain segments of NBFCs will see more impact of RBI's new guidelines in comparison with others, he says.
The second quarter earnings season has been the most inclusive one, according to Gautam Duggad, the head-research of institutional equities at Motilal Oswal Financial Services Ltd.
"The beat has been across the board. So, if we make the estimates for 21 sectors, out of that 19 sectors have delivered numbers which are better than expectations, or at least in line with expectations. There are only very small sectors, which have missed expectations," Duggad told BQ Prime's Tamanna Inamdar in an interview.
"In fact, I would go ahead and say, this has been the best quarter in the last 5-6 quarters," he said.
Impact Of The RBI Circular
"All cores of financials have beaten expectations and they've been performing very well for last 4-5 years," he said.
Considering the recent guidelines by the RBI, that tightens rules for personal loans, he said that certain segments of NBFCs will see more impact in comparison with others.
According to him, banks are relatively more cushioned as they have far bigger balance sheets.
It will require a couple of months to see how the companies react to this and if it will impact the borrowers, he said. The response from different companies will majorly depend on the product mix they have, Duggad said.
Top Picks
"Our preference is PSU banks, NBFCs, private banks, and of course a very separate allocation for non-lending finance," he said.
On the consumption side, he has a bias towards the discretionary sector, with Titan Co. being the top-most choice. The other choices include the Indian Hotels Co., Zomato Ltd., DMart (Avenue Supermarts Ltd.), Metro Brands Ltd. and Lemon Tree Hotels Ltd.
In the large-cap sector, he spoke about Titan and Mahindra & Mahindra Ltd., whereas his mid-cap choices other than Metro Brands include Angel Broking Ltd., Medanta Hospital (Global Health Ltd.), and Ashok Leyland Ltd.
