IIFL bullish on the utilities sector, lists top picks
Harshvardhan Dole, Sr VP-Institutional Equities at, IIFL discussed the outlook for oil marketing companies (OMCs), stating that if oil prices remain between $75 and $85, these companies could see a significant uptick in earnings over the next 12 to 18 months.
Harshvardhan Dole, Senior VP of Institutional Equities at IIFL is bullish on the utilities space. According to him, the power sector is currently experiencing a significant uptrend in capital expenditure, expected to last over a decade. He believes that stakeholders across the industry will reap substantial benefits from this trend.
Speaking to CNBC-TV18, Dole said, “There will be a multi-year cycle in terms of earnings upgrades, leading to secular growth for some and cyclical growth for some of the stakeholders.”
According to Dole, this bullish trend encompasses both public sector undertakings (PSUs) and private utilities. He said that while some stocks might price in the growth upfront, and then they will consolidate, while some will take some time to re-rate. “In general, we are fairly bullish, regardless of whether it is a PSU or whether it is private utility, we are quite bullish on the whole space.”
Regarding specific investment opportunities, Dole identified NTPC as a top pick due to its plans to double its capacity over the next decade, incorporating both thermal and renewable energy sources.
He highlighted the compounding effect on earnings resulting from this capacity expansion, making NTPC an attractive investment opportunity despite recent valuation changes.
Dole also prefers Power Grid and Torrent Power. He suggested that Tata Power could also offer favorable prospects for investors willing to tolerate volatility.
He discussed the outlook for oil marketing companies (OMCs), stating that if oil prices remain between $75 and $85, these companies could see a significant uptick in earnings over the next 12 to 18 months. He singled out BPCL and IOCL as preferred picks within the sector, reiterating a strong buy recommendation.
(Edited by : Shweta Mungre)
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