The brokerage firm is going big on the NBFC space particularly on the housing finance companies as the government aims to attain a "Housing for All", Prime Minister Narendra Modi‘s pet project, by 2022, believes Vaibhav Agrawal, Head-Research & ARQ, Angel Broking
Angel Broking is going big on the NBFC space particularly with regards to housing finance companies as the government aims to implement "Housing for All", Prime Minister Narendra Modi’s pet project, by 2022, believes broking firm's Vice President and Head-Research Vaibhav Agrawal.
“In the NBFC space, there are no NPA issues plus the demand is robust due to government’s focus. Cost of funds is also coming down because of lower interest rates,” tells Agrawal in a freewheeling chat to Moneycontrol.
Government's ‘Housing for all’ initiative is expected to give an immense boost to the companies from the housing finance space.
Apart from NBFCs, Agrawal is also bullish on consumption sectors including companies like Blue Star, Asian Granito and Mirza International. Angel Broking also likes a few stocks in auto ancillary space like Amara Raja which is gaining market share.
“Our criteria for auto ancillary is that it should not be dependent on a single OEM (Original Equipment Manufacturer) so Amara Raja has a lot of OEM clients and has its own brand, plus they have a replacement market for batteries and it's better than Exide,” said Agrawal.
His views remain cautious on Maruti Suzuki as the valuations have become expensive but believes that the stock will remain a 'decent performer.'
Notwithstanding the near-term underpeformance, the brokerage firm advises investors to lap up IT shares given the cheap valuations of most top IT counters.
“I cannot have a sell call when the IT stocks are trading at 12.5-13 times (one year forward PE). Valuations are too cheap. So it’s better to keep it and be patient for a couple of years and they are bound to reward you ultimately,” Agrawal said.
Agrawal is a follower of a bottom-up approach to investing in which the investor focusses on the individual stock rather than the industry or the economy as a whole.
“Top-down things look great but if you start moving top-down and look at sectors you will face challenges in being outright positive on sectors as a whole, which is when you again need to start looking at a bottom-up [approach],” explains Agrawal.
Speaking about key triggers, Agrawal believes the outcome of state elections, especially of Uttar Pradesh (UP), can be a big development for the market.
Agrawal is awaiting big IPOs like those of NSE and Avenue Supermarts (D-Mart owner) to hit the market.
“It will be very interesting to see NSE IPO and D-Mart IPO as they both have interesting business models. We are also waiting to see at what valuations they will come,” said Agrawal.
Speaking about the consolidation in the broking industry, Agrawal said, “Big players will gain market share from smaller ones and will consolidate. Investment which is now required in technology mobile platform, work that we are doing in research, algorithmic technology…smaller brokers cannot afford these.”
Angel Broking has a new investment engine ARQ which uses alpha algorithms to choose best performing stocks.He advises retail investors to invest in a systematic way through SIP and for beginners Angel Broking offers good advisory products as per an investor's needs.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.