Kotak MF advises caution while selecting stocks at attractive valuations; eyeing cos with steady cash flow

Market valuations in these uncertain times with regards to coronavirus have corrected significantly across the board but one has to be careful while selecting stocks for the portfolio because if there are high fixed cost and leverage in the business then those are the businesses, which are going to be vulnerable in this kind of a scenario where demand has completely collapsed, said Harsha Upadhyaya, CIO equity of Kotak Mutual Fund.

Therefore, we need to look at those businesses, which have steady cash flows, and have lower fixed cost; businesses which have shown in the past that the management has managed to build thems and come out stronger from the crisis situations. We can still bet on such companies since they are available at very attractive valuations,” said Upadhyaya in an interview with CNBC-TV18.

When asked if he saw recovery in private sector banks post this crisis, he replied, “It is a bit early to take a call on that but we all know that all the leverage businesses in this kind of an environment will tend to underperform and financials have a lot of leverage.