Samvat 2074: Should you go defensive this Diwali? IT, Pharma among top brokerage picks
IT and Pharmaceutical sectors may have had a poor run on the bourses in the year. However, top brokerages including ICICI Prudential and Ambit Capital are turning bullish on the prospects of the sectors, come Samvat 2074. In an interview to ET Now, S Naren said, “We are going to see that in the next three years, rupee is likely to go back to the old depreciation situation. The two principal exports of India are IT and Pharma. Actually they have got hurt in the last four years due to a flat rupee. We think they will gain out of a flat rupee depreciation from here over the next 2-3 years.”
Similarly, Saurabh Mukherjea of Ambit Capital told ET Now, “What we’re telling clients is look at the sectors where nobody wants to invest. Look at IT and Pharma, there are very high quality franchises, which are trading at 14, 15-16 times earnings, with solid cash generation, high 20’s Return on Equity, both in the large-cap IT stocks, and mid-cap Pharma stocks. There’s plenty of value there, but investors currently don’t want to look there.”
Investment maestro Rakesh Jhunjhunwala too is bullish on the Pharma sector. At a time when many other top experts had advised investors to stay away from the sector, the investing icon has actually increased stake in the space. In Lupin Ltd, he has increased stake to 1.89% as on 30th September 2017, as against 1.76% in the previous quarter, even though the drugmaker had actually posted a 60% slump in profits for the first quarter.
In August this year, Rakesh Jhunjhunwala’s wife picked up 0.9% stake in Fortis Healthcare for an estimated Rs 60 crores, through an open market transaction. “Everything that could go wrong for the Pharma sector, has gone wrong. The US market got very competitive. Rupee depreciated, and the Pharma companies had very bad sales domestically due to GST. I would say the worst in behind us. The rebound will depend a lot on the individual companies,” Rakesh Jhunjhunwala told CNBC TV18 yesterday.