Pankaj Pandey identifies defence, pharma and consumption as core inventory choosing themes
Monsoon threat: pockets of rural stress, however restricted macro harm
Addressing considerations round a poor monsoon, Pandey famous that the influence on total agriculture output will not be as extreme as feared.
He mentioned, “A decrease monsoon undoubtedly could be a problem, however traditionally what we now have seen is that total agri manufacturing doesn’t get impacted a lot as a result of not all the things is rain-fed. Nonetheless, from an organization’s perspective, it’s barely unfavorable for some firms which derive a superb quantity of revenues particularly from the agricultural market.”
He added that particular sectors resembling tractors and two-wheelers might see near-term softness.
“For instance, M&M, our sense is that it might face challenges from a quarter-on-quarter development perspective, particularly of their tractor section. Even for two-wheelers additionally, in case the monsoon is prone to be poor, gamers are anticipated to witness some softness of their volumes,” he mentioned, whereas stressing that the broader market influence would stay restricted.
Heatwaves and tactical sector performs
On whether or not buyers ought to contemplate sector rotation, Pandey instructed it could be early for sturdy tactical calls, however highlighted selective alternatives.“In case heatwaves are there, presumably EMS as an area can do properly as a result of air conditioner as a class has development expectations of mid to excessive teenagers. We’re nonetheless at far decrease penetration ranges of nearer to about 14–15 %. So that is one section which might do properly, however sure, early days,” he famous.
Earnings: regular however uneven Nifty development
Commenting on This autumn earnings, Pandey mentioned outcomes had been largely according to expectations, although sectoral divergence stays sharp.
“From an earnings perspective, Nifty earnings for the quarter are someplace about 5 % and largely according to expectations. Monetary earnings had been comparatively higher at 7 % development,” he mentioned.
Nonetheless, he identified continued stress in key index-heavy sectors.
“In BFSI, HDFC Financial institution continues to stay below stress. In IT, there may be little hope when it comes to a revival in earnings, so greenback earnings development is once more anticipated to be round 4–5 %. Practically 20 % of the Nifty is below stress,” he added.
On the similar time, broader markets proceed to outperform.
“That is the third consecutive quarter of 20 percent-plus development in midcaps. For This autumn, midcap revenue development is about 28 % and smallcaps round 24 %,” he mentioned, noting that broader market earnings stay strong.
Pharma, aviation and sector divergences
On pharma, Pandey noticed energy within the home market whilst export situations stay blended.
“In pharma, the home market is shocking on the optimistic facet, with development of round 12 % for the third consecutive quarter,” he mentioned.
On InterGlobe Aviationhe flagged crude oil and gas prices as key headwinds.
“The general problem within the hospitality and aviation area has been excessive ATF costs. Until the time crude doesn’t come down, we’ll proceed to see challenges. Demand can be seeing some recalibration as a consequence of greater costs,” he mentioned.
He additional added that significant enchancment would require a fabric correction in oil costs.
“Crude oil costs want to say no by 14–15 % for issues to grow to be much more constructive in all the area,” he famous.
Crude influence: paints and autos in focus
Pandey recognized paints and autos as potential beneficiaries if crude oil moderates.
“Paint would be the first class to profit from a decline in crude oil costs. Asian Paints has been witnessing quarter-on-quarter enchancment in volumes, and steerage of 8–10 % development is fairly good,” he mentioned.
He added that margins stay comfortably positioned.
“Between the 2, paint is healthier positioned when it comes to defending margins. Auto and paint are higher worth picks if we consider a decline in crude oil costs,” he mentioned.
Asian Paints: margin resilience and competitors easing
Discussing Asian Paints particularly, Pandey mentioned aggressive depth could have peaked.
“I’d wish to consider that the height of total problem when it comes to competitors is behind us,” he mentioned.
He highlighted that value hikes have largely offset enter value pressures.
“General, they’ve largely coated the sort of enter value hike which has been taken. If crude oil costs decline from right here, the corporate would have little problem in defending margins,” he added.
He additionally pointed to enhancing quantity developments throughout the sector.
“We’ve got seen quantity inching up from low double digits to excessive single digits. In truth, this quarter it was about 12.5 % quantity development,” he famous.
Textiles and cotton: easing enter stress
On textiles, Pandey mentioned easing cotton costs might help margins and profitability.
“Home cotton costs had gone up by almost 17–18 %, so this can be a welcome aid for gamers. Yarn spreads have additionally elevated considerably,” he mentioned.
He highlighted firms resembling Indo Rely and Mills Mortgage as potential beneficiaries, whereas noting that commerce agreements might additional enhance visibility.
Defence: execution gaps however long-term themes intact
On defence, Pandey flagged considerations round execution however remained constructive on choose firms. “BDL was undoubtedly a really unfavorable shock, sitting on a ten occasions order e book and but not with the ability to execute,” he mentioned.
Nonetheless, he remained optimistic on radar-linked and rising expertise segments.
“Firms like Astra Microwave and Information Patterns are trying good. MIDHANI numbers had been additionally optimistic with 12.5 % development and steerage of 20 %,” he added.
He additionally pointed to anti-drone expertise as an rising theme.
“What can emerge as a greater theme is the anti-drone market. Bulk of revenues going ahead is predicted to come back from drone and anti-drone segments,” he mentioned.
Outlook: selective energy amid uneven market
General, Pandey’s evaluation factors to a market the place earnings energy is broadening past giant caps, however index-heavy sectors proceed to face stress. Whereas macro dangers like monsoon variability and crude oil stay key watchpoints, selective alternatives throughout midcaps, home consumption, and defence expertise proceed to form investor positioning.
