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Any decline in telecom stocks, be it or , could be a good addition to a long-term portfolio, says Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services. Edited excerpts from an interview:
Do you think one should buy telecom stocks like Bharti Airtel on dips?
5G is expected to help telecom companies improve their product offerings and also increase their overall ARPUs. So that is something which will help them as and when the 5G rollout takes place. We have seen how tariffs got stuck in the 4G space and how the overall mix led to higher ARPUs. But tariffs have not increased for more than a year-and-a-half now. So 5G rollout will help them come out with new plans which could be much higher in terms of tariff. It may also help them in terms of ARPUs. So any decline in some of these telecom stocks, be it Reliance Industries (RIL) or Bharti Airtel, could be a good addition to a long-term portfolio.
What is your take on auto ancillary stocks? Do you believe that there is merit for more upside?
The auto sector has been an unlock trade where the market is expecting that once the economy opens up things will improve. The monsoon is expected to be good. If you look at the auto ancillary space, export-driven companies have seen good demand revival. European markets are helping them improve volumes on a sequential basis. Q4 numbers have been very encouraging for auto ancillary companies. Within OEMs, we like the passenger vehicles segment. On the rural side, we like tractors which continues to do well for the last two-three years. We believe that this year again they will continue to do well. We like Bharat Forge, followed by Motherson Sumi.
Which stocks are you leaning towards in the defence sector?
In the defence space, we have seen a lot of news flow but on-ground developments are yet to pick up. We saw this space buzzing at the time when the government was on an overdrive for the Make in India plan and now with the Aatmanirbhar plan there is again some action. So it is a very interesting space which is opening up. A lot of companies are present in defence. However, if you look at the proportion or the business coming from defence, it is right now too less to impact their overall profitability. BEL, BHEL, Mazagon Dock and Cochin Shipyard look interesting.
Do you think one should buy telecom stocks like Bharti Airtel on dips?
5G is expected to help telecom companies improve their product offerings and also increase their overall ARPUs. So that is something which will help them as and when the 5G rollout takes place. We have seen how tariffs got stuck in the 4G space and how the overall mix led to higher ARPUs. But tariffs have not increased for more than a year-and-a-half now. So 5G rollout will help them come out with new plans which could be much higher in terms of tariff. It may also help them in terms of ARPUs. So any decline in some of these telecom stocks, be it Reliance Industries (RIL) or Bharti Airtel, could be a good addition to a long-term portfolio.
What is your take on auto ancillary stocks? Do you believe that there is merit for more upside?
The auto sector has been an unlock trade where the market is expecting that once the economy opens up things will improve. The monsoon is expected to be good. If you look at the auto ancillary space, export-driven companies have seen good demand revival. European markets are helping them improve volumes on a sequential basis. Q4 numbers have been very encouraging for auto ancillary companies. Within OEMs, we like the passenger vehicles segment. On the rural side, we like tractors which continues to do well for the last two-three years. We believe that this year again they will continue to do well. We like Bharat Forge, followed by Motherson Sumi.
Did you Know?
Stock score of Reliance Industries Ltd moved up by 1 in a week.
View Latest Stock Report »In the defence space, we have seen a lot of news flow but on-ground developments are yet to pick up. We saw this space buzzing at the time when the government was on an overdrive for the Make in India plan and now with the Aatmanirbhar plan there is again some action. So it is a very interesting space which is opening up. A lot of companies are present in defence. However, if you look at the proportion or the business coming from defence, it is right now too less to impact their overall profitability. BEL, BHEL, Mazagon Dock and Cochin Shipyard look interesting.
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