Need to be selective in EV space; bullish on consumer durables: Kotak Mahindra AMC

Pankaj Tibrewal, Senior Executive Vice President and Fund Manager-Equity, Kotak Mahindra AMC, believes there’s a need to be selective about stocks in the electric vehicle (EV) space. According to him, the electric vehicle theme has just started globally and in India as well and lots of companies are currently going through the EV transition. In this regard, he also stated that he likes auto ancillaries that benefit from this space.

In an interview to CNBC-TV18, Tibrewal said, “We need to be cognizant of the fact that we need to be very selective in the stocks that we pick up. Our preference in this sector is more towards auto ancillaries which are agnostic to any engine whether internal combustion engine (ICE) or electric vehicle (EV) and we are positioning our portfolio accordingly.”

On sectors other than autos, he is bullish on the entire consumer durables space. According to him, penetration levels have been really low in the sector.

Additionally, he also mentioned that Kotak has several companies across the white goods and appliances sectors in its portfolio.

“This sector is bound to do well. But what we need to be careful about is- which are the companies that are innovative, have strong brand distribution and pricing power over a period of time. There are many companies in our portfolio across appliances and white goods sector where we are positive on, but from a 3-5 year perspective, this sector is looking very good,” Tibrewal said.

On the IT space, he remains confident about the earnings momentum going strong. However, he cautioned that valuations are a big challenge for the sector.

“We are very selective on this space. We believe valuation, compared to the past 5-6 years, is very high. There is a very high probability that earnings will come in, what happened in Q3, but stocks didn’t react positively to it and as a result, we saw multiple compression happening and that’s a possibility as we move ahead in the next 12 months,” said Tibrewal.

He mentioned that he is positive on the city gas distribution (CGD) companies as well. According to him, the oil and gas sector has seen low investments lately and supply in the sector is not in sync with demand.