Selective on IT; prefer Brigade, Oberoi in real estate: Ambit Capital

Ambit Capital will be very selective on IT companies, Dhiraj Agarwal, co-head of equities, told CNBC-TV18.

“IT, we are slightly cautious at this point. IT is more narrative-driven as compared to numbers-driven. So, when there is strong momentum in the economy in the US and Europe markets, the general perception is that buy IT in India,” he said.

He further said, “IT will continue to grow, but obviously the growth is likely to be in the 10-12 percent range and not in the 15-16 percent range. So one has to think about whether valuations have outrun the growth potential of the sector but the narrative is very strong; the US economy, the European economy is on a strong wicket. The general market expectation is that IT is more likely to beat earnings on the upside rather than on the downside. In the midcap space, we like Mphasis. We are very selective in IT names at these valuations.”

According to Agarwal, largecap real estate companies have been gaining market share. “We believe the premium branded players are doing well, so the large and best players in each of the micro markets are actually gaining market share while the rest of the real estate industry is actually struggling. So anything which caters to a slight amount of premiumisation and formalisation theme is a segment to look for. So whether it's consumer durables, whether it's real estate, for example, Brigade Enterprises or Oberoi Realty is what we like in the real estate space,” he said.

On autos, Agarwal said, “We like commercial vehicles (CVs) the most at this point, so both Ashok Leyland and Tata Motors, and within two-wheelers, TVS Motor is at an attractive price at this point.”

For the entire interview, watch the video