6 financial and realty stocks that may shine in 2022: Rahul Sharma

What are the triggers to watch out for after a decent CY21 of more than 25% gains at the index level?
It is a very wonderful day to close this year as Nifty reached 17,400 levels and then Bank Nifty went above 200 DMA and is trading above 35,500. All sectors are in the green today and I think the upcoming months of January and February will be really good for the market. Overall, we are very bullish for 2022.

What are the triggers for the markets? Are valuations a big hurdle going into 2022?
Definitely valuations are hurdles but we have been seeing newly listed companies with really huge valuations. But they have got good potential and like in the recent past, we have seen the correction and the valuations went to a very comfortable stage and we advised each and everyone that if a company is good on the fundamental side, every decline shall be used for adding to your portfolios. The bottom that we saw in the recent past for the Nifty at 16,400 levels is a really good moment to add on. In future also, any decline will be the point to add to your portfolios because in the long term, we are bullish on the market and 18,000 plus levels will be achievable in coming days for Nifty.

We have seen what is happening as far as the overall banking and metal space are concerned. Banking is something which is going under the weather or underperforming after five-six years of continuous outperformance. What would you say about it?
Definitely there is some kind of pressure. If we look at the whole sector-wise allocation in the market, year till date, the bank index has only given around 13.6% of return while PSU banks shone by giving around 40% plus of return. But definitely because of the pandemic and the economic recovery and the global pressure, there will definitely be some kind of volatility in the market from the banking perspective as well as for the financial services.

There are many opportunities in the market from this particular sector itself which can outshine others in the coming days. Stock specific moves will be needed and in banking, HDFC Bank, ICICI Bank and SBI look good in terms of value addition in coming days. This shall be continued in future and stocks like CDSL or BSE are also waiting for the next momentum to come in the market. These may shine in 2022.

Where do you think we are better off – midcaps, largecaps or smallcaps? Or should there be an equal mix because valuations across the board are different than what they were at the start of last year?
Definitely. Now the leading segments will be the largecaps, then definitely midcaps and smallcaps because a good amount of value addition will be done in the coming days and I feel opportunities are really good in terms of returns and value addition in the midcaps and the smallcaps especially.

We also like companies which have been struggling in terms of capex and they will really come up in terms of good returns in the market. They will be putting up really good efforts in this kind of situation.

How would you look at new age companies? Do you expect more listings, more valuation games to continue for the markets, especially in the ecommerce space? Is there anything like Nykaa or Zomato that you like there?
Yes, but see the names you have taken, valuation wise are already stretched out. Also in the case of Nykaa, we have seen a huge runup. But speaking about Paytm, there is kind of dent and people should wait for more time because these stocks have not seen the correction or the ups and downs of the market, they have listed when the market was really buoyant. These stocks have never faced corrections or declines in the market. So one has to wait and watch before adding up the portfolios, especially for the long term. But still there are a few companies which I have listed for my selection. I think those will really do good.

How would you look at L&T, Thermax and various other road companies where for the first time after a really long time, private sector capex is happening?
I am really bullish on the realty and infra space. Amongst them, I like Prestige Estates Projects with a one-year horizon. Prestige Estates is in the business of real estate development encompassing the development of construction of properties, leasing of offices and retail properties. The company has maintained a leadership position in Bangalore and has a significant presence in Hyderabad and Chennai.

It has also extended the operations to Kochi, Mangalore, Goa, Pune, Mumbai and Ahmedabad. The company has completed around 120 residential projects in the recent past and there are ongoing projects as well. The company also develops landmark hotel, resorts and service apartments. They have completed eight projects and there are ongoing projects as well.

The company is focussing on the middle income group. It will be starting its mall in tier II cities like Ahmedabad, Amritsar, Bhubaneswar, Chandigarh, Indore, Mysuru and Cochin and it will be launching Prestige Smart City on the platform of HDFC for targeting mid income buyers. It has a market capital of around Rs 19,000 crore against the enterprise value of Rs 23,500 crore. The company has been constantly generating positive operating cash flows and the promoters are the majority stakeholders which shows their confidence in the company. Around 25.31% is with FIIs and DII have 5.68% exposure. of around 5.68% and the company has a free float of just 3.53%. So I think overall space and especially Prestige Estates Projects is a really good pick for the target price of Rs 650 to 700 with a one year horizon.