Talking to ET Now, Abhimanyu Sofat , VP-Research, IIFL , says bullish on GIC Housing as well as DHFL in the housing finance space.

Edited excerpts:

Is consumer sector the place to be in 2018? Is the consumption theme going to be a winner yet again?
I think so, after a two-year lag of rural India not doing well, we clearly see the rural wages going up and going forward, the consumer returning. In fact, if you look at the 10-year bond yield, it is at 7.2%. I believe there could be some sectoral rotation happening in the market. Coming to the consumer sector, following demonetisation and introduction of GST, organised guys are really benefitting and the rise of disposable income is clearly leading to consumption. A lot of the midcap stories on the consumer side are likely to show earnings growth of around 25% to 30% CAGR and for that reason, there is still a lot of steam left in those stocks.

Tata Motors is showing signs of life once again...
The kind of product launches that JLR is going to do going forward and considering the risk reward which is there in the stock, within the large-cap space one of the top picks needs to be Tata Motors DVR. For a long period, the stock has underperformed but look at the valuation difference between the company and global players as well as Maruti. The difference is quite large. Along with JLR, there is recovery in the domestic CV cycle as well. Tata Steel is talking about domestic 98% kind of utilisation, so as you see more output moving out, larger haulage trucks being used. All that suggests sanguine prospects for something like Tata Motor DVR. So, it is a strong buy at current levels.

What is the approach in housing finance companies (HFCs) right now?
The affordable housing segment should do well. On the other hand, if you look at the people who are lending on the housing side, things may not be that rosy because clearly lowering the cost of funds may not be an option going forward. Those opportunities are clearly coming down. If you look at the affordable housing side, something like a DHFL which has a significant presence on the affordable housing side continues to look quite attractive to us. In addition to that, something like GIC Housing would be preferred over LIC because in case of LIC, there could be market share losses going forward. So GIC Housing as well as DHFL would be our bet within the space.

Do you think that would pave the way now for possible re-rating in some of the other names so that laggards like Tata Motors will also run up or is that too farfetched and conviction should be with the compounding story in Maruti?
If you have to create alpha, it is unlikely that you can make it from Maruti. If you are looking for a 15% kind of return, it is possible in case of Maruti because from the market share perspective, we have already seen it has done pretty. In case of Tata Motors, I think there is a story not only of domestic revival but globally also we see that JLR's new models are doing well because the product innovation line which Tata Motors has gone through over last couple of quarters and which is likely to be fruit over next two years. All that should lead to a decent growth in terms of volume. Clearly Jaguar which is first focusing on high ticket, is now reducing the pricing for going to more segments with a bigger customer base. That kind of shift in terms of targeting is likely to boost the top line of the company and from that perspective, the Tata Motor DVR especially looks quite decent.