Themes to sail inflation tide smoothly
With the ongoing medium-term inflationary outlook, pro-cyclical sectors benefit the most, writes Santosh Kumar Singh of Motilal Oswal AMC. Growth rates and margins of financials and commodity companies will see a positive impact in the medium-term inflation environment, he writes.
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Sectoral bets with value comfort
The current bull market has seen a secular sectoral rotation and there have been a few laggards from a pure valuation perspective. One of the spaces which has lagged behind is consumer space, opines ABSL MF’s A Balasubramanian. “The price has not corrected but they have gone through time value correction in the last one or two years,” he says.
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Cash flow is the king!
Dalal Street’s favourite metric to gauge scrips, PE ratio, can be quite misleading while trying to spot multibaggers. Veteran fund manager Saurabh Mukherjea illustrates this by taking
stock for consideration. “Asian Paints for example, a PE multiple that is large in the absolute sense is not necessarily expensive,” he says. So where to look for the answer? It’s in cash flow!
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Realty’s long cycle has just begun
It’s a known fact that when India’s middle class and upper middle class does well, the real estate sector comes back to life. Dalal Street veteran Dipan Mehta sees the realty cycle to last 6-7 years on the upside. This is reflected in cash flows of listed realty players.
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Winning the ‘margin’ game
The biggest scare for corporations during rising inflation is operating margin squeeze, thanks to rising raw material prices. The bad news is that 97 per cent of companies that declared earnings for the Apr-Jun quarter have failed to deliver margin expansion for four quarters now. But the good news is that we have listed out 40 stocks among the elite club of remaining companies who buck this broader trend consistently.
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