- The stock market has started well in Vikram Samvat 2078 and many IPOs are also coming.
- Which stocks to buy this year, said Sandeep Sabhahrawal, an analyst at AskSandipSabhrawal.com.
- He also spoke about the importance of SBI shares.
SBI’s figures and management commentary were sharp. Dalal Street liked this. What is the future of SBI?
Yes. So I think SBI is positioned like ICICI Bank where the value of the SBI subsidiaries is going to go up because the subsidiaries are performing well and adding value to the valuation of some parts as a whole. These banks have given good returns this time, especially in terms of net interest margin, where they have done well despite very low lending growth. This was quite a surprise, as it means they are actually saving on CASA deposits, which means they have a lot of value for a lot less.
Going forward, credit growth needs to bounce back for the stock to perform well. SBI is one such stock where valuations are still quite cheap. So one can only argue on valuations that the stock should be very high, but credit growth needs to accelerate and as credit growth picks up, so does credit quality.
If they are able to do that over the next one year and maintain the quality of their books with accelerating credit growth, we will see more rewrites in SBI.
Next year may not be like last year, as most of the experts we spoke to said that we should be happy and satisfied if we get maximum 12-15 index returns. what do you think
Expectations should be lowered considerably. I have a midcap product. Compensation YTD now exceeds 70 percent; This is an extraordinary comeback and cannot be sustained. I think the return expectation should be brought down significantly for whatever is coming in the market right now. Expected returns should not exceed 10 to 15 per cent in the next one year.
Which sector will be the leader next year?
It’s difficult to identify a leader, but even when the market does well, some financial stocks clearly outperform. In financial matters, ICICI Bank ranks best. The bank has performed well and the stock is trading at Rs. reached 850. Now it has improved by about 8-10 per cent. It is still in the value zone, so overall the market could be correct. But, it is a very good company for the people, as they are not only maintaining credit growth, they are gaining market share and also able to maintain their asset quality.
In Mahindra & Mahindra’s case, last year was tough for the auto sector due to false spending pressures and rising inflation. This is a company that should do well. The new procurement policy favors high quality companies rather than only L1 bidders. I feel, good quality infra capital goods companies will outperform and in that space L&T is clearly the leader in the pack. There are many other manufacturing companies also, whose quality is high, they can also do well in the next one year.
Pharmaceuticals has performed worse than in 2020. What do you think about pharmaceuticals now? Do you think this sector will continue to perform poorly?
I don’t think we should all have the same perceptions. On the largecap side, both Dr Reddy’s and Sun Pharma are giving opportunities. Doctor. Reddy’s is ahead of other pharma companies in terms of margins. which she is delivering. Investors should invest a little in it.
Sun Pharma is a company that is ours. The results were good and believe me, they are very well presented and the evaluation is not overly demanding. As far as valuations are concerned, pharma has been a very demanding sector, but today the valuations are much lower than other sectors.