Safe Bets: HDFC Bank, Voltas, UltraTech Cement—Citi Bullish On Demand Savvy Counters Amid Tariff Risk
Citi's Stock Picks: A favourable update on India-US trade deal, return of foreign capital and GST cuts in Diwali that fuel demand in the economy are some positive triggers for Dalal Street.
HDFC Bank Ltd., UltraTech Cement Ltd., Voltas Ltd. and Jubilant FoodWorks Ltd. are some of the counters that analysts at multinational investment firm Citigroup have a positive bias amid trade uncertainty and a likely pickup in demand after GST reforms.
Domestic consumption has got a boost due to demand-side stimulus like income tax cuts by the government, Head of India Research Surendra Goyal told NDTV Profit in a roundtable.
He said first-quarter earnings of India Inc. were largely in line and valuations have normalised this year, citing the domestic market's underperformance among emerging peers.
US tariff policies remain an overhang for Indian equities. "There has been a shift in thinking — from India being relatively well placed on tariffs to being impacted to most," Goyal said.
Going ahead, a favourable update on India-US trade deal, return of foreign capital and GST cuts in Diwali that fuel demand in the economy are some positive triggers for Dalal Street, he said.
Citi's Stock Picks
With regards to the US tariff impact on banks, Kunal Shah, who tracks the sector at Citi, said the exposure of lenders to export-oriented businesses is 3-6% and hence will not weigh on them. In the financial pack, he favours HDFC Bank Ltd., RBL Bank Ltd. and Shriram Finance Ltd.
On IT, Surendra Goyal said US corporate growth can be a catalyst for domestic companies. Notably, Indian IT has not benefited from the artificial intelligence revolution globally and a turnaround can only happen if they develop AI-savvy applications.
Raashi Chopra, who tracks cement at Citi, said the sector was more resilient in Q1 than expected this quarter. "Demand was weak, but the sector managed to pull off price increases. Larger players reported a decline in volume."
She noted that since cement demand is not price elastic, GST changes in October will not mean much to the sector. Chopra recommended sticking with larger players like UltraTech Cement in the medium term.
In metals, Hindalco Industries Ltd. is a preferred bet in the metals space. Quick service restaurants will be the biggest beneficiary due to an uptick in consumption after GST cuts, according to Ashish Kanodia. Selective quarters in consumer discretionary may do well.
He said Jubilant FoodWorks has done well in store expansion. Consumer durables like AC-maker Voltas may see a fillip from better sales in the festive December quarter.
