Bullish on these 4 auto and consumption names: Rahul Shah

Continuously, for maybe a couple of days, we have had a dry day. This is going to be the biggest challenge for the near term. The Q4 numbers have been pretty strong and the guidance also are pretty strong but the biggest headwind right now is the selling by FIIs. That is the biggest fear which the market right now has.

What is the outlook when it comes to IT? The commentary from the management sounded very cautious. They are saying there is going to be low growth, high inflation. We also spoke with the CFO of who had a bit of a divergent view saying that that is not going to alter deal momentum. Are you worried about the overall macro implications on IT?
It is factored into the price correction. In the IT universe, most of the stocks have corrected 15% to 20% in largecaps and midcaps have been hammered more. So there is a mismatch between the hit in terms of the growth factor that they have mentioned and the way the stock prices have corrected.

Secondly, the dollar-rupee is hitting a new low and that is again a beneficiary for most of the large IT companies. In IT, from valuations’ perspective, the current levels look attractive. The risk to reward should be favourable from here and maybe the midcap IT companies have a larger room for appreciation. They have also fallen 30-40% from their recent highs. My sense is one should look into the IT companies and definitely build in from the current levels.

In , while the buyback is going to support the stock price, looking at the market, I do not know how much of a success it is going to be. But having said that, this seems to be a very well thought through plan, considering the buyback is coming in from Bajaj Auto.
Definitely. It is a first of its kind coming from Bajaj Auto and if I look at the entire auto space, a lot of stocks have hit 52-week highs’ irrespective of the way the markets are right now. Bajaj Auto also has moved up in the last few sessions. My sense is any buyback is good for the investors as a whole.
One should look at auto companies build it up. Obviously two-wheelers and four- wheeler passenger vehicles remain the top bets and the slides in the metals show which is going to be beneficiary for most of the auto companies.

One should look at it. Valuation-wise it has been reasonable and auto stocks have been laggards in the last year-and-a-half when the markets moved up but stocks have not performed. So, the risk to reward offers are favourable from here. We should look at Bajaj Auto in a two-wheeler space. I think in the four-wheeler space,

looks interesting from current levels, the way the stock moves and the huge cash in the balance sheet.

These two stocks look interesting. However, the May auto numbers were not so encouraging which was below estimates and most of the analysts were expecting. It looks promising going forward and one should start allocating some portion into the auto stocks.

Irrespective of what the market is up to, consumption has made a strong comeback. Everyone is trying to tighten their purse strings but that does not seem to be playing out for some of these consumption names. would qualify as a very special situation and special case stock. One cannot make an apple to apple comparison with Trent and the others?
As you rightly pointed out, consumption names are coming back into it. Post Covid, we have seen a lot of attraction in a lot of these names. Obviously the retail play has done quite well in recent terms. Trent looks attractive from the current valuations going forward. Also one should allocate some portion of money into it.

Another interesting name to look at is Aditya Birla Fashions. Their numbers were decent in line with the street estimates and the Q4 commentary was strong. One should look at that. We have seen a decent correction in the stock from a near term high. One needs to buy two, three stocks and make it a basket. So my top two runners in this entire space are

and Trent from a medium term perspective.