What is your take on the telecom basket?
In the telecom space, only two players are available today. Vodafone-Idea is losing market share which has been gained by Jio or Bharti Airtel. Bharti has carried out price revisions in terms of tariffs and Voda has followed. The telecom space is going strong. Added to that, Bharti in terms of their operational efficiencies, ARPUs are improving going forward. Since the Indian telecom plays are the cheapest in terms of tariffs across the world, there would be a re-rating in terms of tariff revision for that.
So we are positive on Bharti with a 10% to 15% upside from here on with the positional or maybe medium term perspective. Bharti would be the telecom pick for 2022.
What did you make of Maruti’s numbers? The revenues were pretty much in line with what the Street was expecting at about Rs 23,250 crore.
Maruti results were better than expected, especially on the operating front. Added to that, margins were better, 6.7% versus 5.8%. So from an overall perspective, exports have also been improving for Maruti if I look at the last quarter performance and even the YoY performance for that matter.
The possibility of being a dark horse of 2022 because the positions are really lighter on the automobile space, especially the heavyweights like Maruti. On top of it, we have been seeing a lot of lag in terms of rural data which is coming. Rural spending is right at the bottom and the government would like to boost it through the Budget and I think rural demand will flow. And if rural demand flows, Maruti and other automobile plays will also be good.
So Maruti has a great potential to be the stock for 2022. Added to that, Hero MotoCorp is also one of the automobile plays which we are keeping an eye on.
What is your take on the FMCG basket? Despite the inflation woes, companies like HUL have been fairly categorical that they hope to sustain their market share gains. There will be demand revival as well going forward. Are you going to be very selective within the consumption space and pick out the large caps or would it be more broad based?
FMCG has been an underperformer. If I pick up for the last two quarters, I would be very selective on the FMCG play. Of course, one of the plays is a giant like HUL broadly because of the kind of product profile they have. At any given point of time or any quarter, the volumes will jump as per the expectations and some kind of a spending strength comes in rural India. HUL will pick up the volumes also.
Added to that, one of the plays like Tata Consumer is also very interesting looking at the kind of synergies they are working out with their group companies plus the kind of brand equity they hold. Some of the brands like Tata Sampann are really catching up very strongly in terms of volumes. So, Tata Consumer and Hindustan Unilever are the plays which we are betting on in the FMCG space.
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