Trideep Bhattacharya on 3 sectors with comfortable valuations and good earnings growth prospects
Trideep Bhattacharya, CIO, Equities,Edelweiss MF, says the market is chugging along, given that earnings are still intact and overall growth rate continues to be broad based, not just amongst largecaps but among mid and smallcaps also. That is keeping the mid and smallcap share prices reasonably buoyant in the near term.
Bhattacharya further says: "Over the last three to four months, from underweight, we have gone to neutral IT services. Overall, we will expect great growth rates in the near term, but over the next two to three years, earnings are broadly bouncing around the bottom. We think that when next year global growth picks up after a bit of weakness, you would see this sector starting to do well."
Let us start our discussion with telecom today because there is a big re-rating happening. People are now thinking that from almost going towards a two-player space, we are back to three-player space and probably BSNL, MTNL will be revived soon. So, it will be a nice, vibrant four-player space. Did you have telecom exposure in your portfolios and how are you looking at the way things are panning out there?
Trideep Bhattacharya: I would say that, yes, over the last three months or so, we have increased our position in telecoms.
While the overall long-term dynamics of the business, which is capital guzzling and return ratios have not been so great in the past, every sector goes through a phase where the sector sees a bit of tariff-related reconciliation. What we have seen over the last two or three years is that tariffs have been particularly weak and driven by one of the players.
