Large-Cap & Mid-Cap Value Picks In Volatile Times By HDFC Sec

While valuations across sectors have fallen, we remain bullish on domestic stories, such as (a) power utilities like NTPC and Power Grid with their annuity cash flow, regulated ROEs and high predictability, (b) select cement companies where we see value in terms of EV/tonne plus operating leverage playing out as infrastructure build-out takes place — be it roads, railways, ports, or housing for all, (c) select PSU banks, such as SBI and BoB, because of the valuation comfort and some recent changes in the top management of the latter, and (d) a few road and real estate companies with very low leverage.

However, we recommend a cautious stance on companies that are either overvalued or overowned, and where majority of the profits come from outside India. With global growth under stress, any negative event can see outflow of foreign funds, which can cause sharp volatility in stocks where foreign ownership is high

HDFC-Sec-Value-Picks-Sept15