Foreign research houses Bernstein, Macquarie have rejigged their India portfolio amid cooling off of geopolitical tensions in West Asia that kept global financial markets on edge since February.
The current environment, said analysts at Bernstein led by Venugopal Garre, their managing director and India head of research, is arguably one of the most challenging for generating returns, with no clear direction and several large sectors grappling with structural issues.
As a strategy, Bernstein has exited IndusInd Bank and ICICI Bank following their outperformance on YTD basis within the financials space. While retaining HDFC Bank, the reserach and broking house has added Axis Bank to its portfolio amid hopes of an improvement in asset quality and a more favourable trajectory for credit costs.
“In healthcare, following our earlier overweight move, we are introducing Zydus. The company offers a credible growth profile, supported by contributions from its innovation pipeline as well as its expanding presence in the wellness segment. We remove our IT index allocation (after its underperformance) as IT is more of a bottom up pick at this stage,” Garre wrote.
Larsen & Toubro (L&T), Bernstein feels, should benefit from a normalisation in West Asia, while HomeFirst is seeing a recovery in disbursement growth alongside improving asset quality. Titan Company, too, remains a hold for them amid hopes of a rollback in gold import duties. CLICK HERE FOR THEIR FULL PORTFOLIO
“NTPC remains our preferred utility exposure. DMart continues to be our key consumer play, given its positioning in low-cost staples within metro markets, where demand is relatively more resilient. We also retain PFC, Nuvama Wealth and cash allocation in absence of more ideas,” Garre of Bernstein wrote.
Macquarie’s top bets
Those at Macquarie, on the other hand, have churned their portfolio and classified their strategy/ holdings under three broad categories – stars, rising stars and tactical ideas.
Within the stars theme, Macquarie has added TVS Limited in the large-cap space and exited Mahindra & Mahindra (M&M). They have retained Titan and JSW Steel. CLICK HERE FOR THEIR FULL PORTFOLIO “We are incrementally more bullish on Bharti Airtel (higher tariffs around Jio listing). While HDFC Bank has been a key detractor, we continue to like the fundamental outlook and believe negativity is in the price,” wrote analysts at Macquarie led by Aditya Suresh, their head for India Equity Research in a coauthored note.
Within the rising stars category, Macquarie has added Lenskart and Phoenix Mills. “For this rising stars group, we note a median revenue CAGR of 17% (FY26-28E) with margin expansion driving a stronger 40% EPS growth outlook alongside a 20% ROE,” analysts at Macquarie wrote
As tactical plays, it has added Axis Bank (lower credit cost), Hyundai (new model launches), Dixon (PLI 2.0, Vivo JV) and booked profit in Shriram Finance, Reliance Industries (space for Jio listing), and Coal India.
