Samco baffled by post election rally; liked Jubilant Food, Metropolis, Mamaearth, Senco in mid/smallcap space
Jubilant FoodWorks, Honasa Consumer (Mamaearth), Suprajit Engineering, and Metropolis Healthcare to its SMID picks and retained Senco Gold.These selections are based on their strategic insights and analysis of market trends and valuations. The brokerage has filtered the stocks on growth-adjusted valuations, ROE trends, and cash-flow ratios.
However, it has not considered the stock-price momentum in its filters.The brokerage noted that the Nifty is trading at 20.1x one-year forward PER vs the 18.8x five-year average. This looks overcooked with the premia in the cheaper sectors like banking and industrials more at risk, oddly.
SAMCO sees no positive triggers for the next 2-3 quarters, either from policy (a positive budget is now factored in) or from earnings revisions. It said that it will revisit its June 2025 Nifty target of 22,000 (at a PER of 19x, -1sd below LTA) after the mid-July Union Budget, which is the next big event.The brokerage further pointed out that the BJP’s dependence on coalition partners is unlikely to change the two broad pillars of the NDA’s macro policy – fiscal-monetary conservatism and a preference of capex in state spending.Structural reform, especially in factor markets, will be challenging, as legislation will now require a consensus-building approach.
Though the coalition government could bring more uncertainty in policymaking, SAMCO does not foresee any pivot towards large-scale welfare spending. The post Covid cycle of manufacturing over services and investment over consumption remains undisturbed.SAMCO's counterintuitive calls are i) Overweight on staples, where it sees earnings acceleration and valuation accompanied by a possible turnaround in mass spending; ii) Underweight on Industrials,
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