IT sector: Attractive valuations but not out of the woods
HCL Tech’s recent guidance for FY27 has made Dewan more cautious on the broader IT pack. While TCS had offered some reassurance after its results, suggesting AI-related pressures on margins were manageable, HCL Tech’s commentary brought concerns back to the surface.
“IT will not be so easy to make money by investing in IT,” Dewan told ET Now, adding that despite sharp stock corrections making valuations look attractive, investors should wait for consolidation rather than rushing in. Infosys results are now the next key event, given the company’s relatively stronger performance over recent quarters compared to peers.
FMCG: Britannia leads, margins set to improve
Nestle’s better-than-expected quarterly results triggered a rally across FMCG stocks, with Britannia and Tata Consumer both moving higher in its wake. Dewan sees this as the beginning of a broader re-rating for the sector.
With inflation rising, FMCG companies now have a justification to increase prices, which should support margin expansion going forward. Britannia is Dewan’s top pick in this space, followed by Hindustan Unilever and Tata Consumer. He expects results from these companies to beat street estimates.
Consumer durables: Bet on AC and refrigerator makers
On consumer durables, Dewan was selective. He flagged Havells as a stock that needs more time, citing expensive valuations and a pattern of disappointing earnings over recent quarters. However, he is more optimistic about companies in the air conditioner and refrigerator segment, where a harsh summer is expected to drive strong demand. A delayed start to the season due to unseasonal rains in north India has only deferred, not destroyed, that demand, he believes.
Top sector picks: Energy, hotels, tubes and pipes
Among his preferred investment themes, Dewan highlighted renewable energy companies and metal firms with backward integration into power as strong plays. He has already seen good price movement in these names and intends to keep adding on dips.Hotels is another sector he finds interesting after a weak December quarter led to meaningful price corrections, creating value buying opportunities. Tubes and pipes is a third segment where he senses an order pickup is underway, with Middle East demand adding an additional tailwind for some companies.
Telecom: Airtel is the top pick, Reliance worth watching
Dewan is bullish on telecom, pointing to expectations of another round of tariff increases in the coming months as a key margin support. Bharti Airtel is his top pick in the sector, especially after its recent price correction. He also likes Reliance Industries as a broader play, given the anticipated Jio IPO this year and the stock’s correction from recent highs.
Insurance: General over life
On the insurance sector, Dewan was candid about his disappointment with life insurance stocks, saying investors have seen limited earnings growth and poor stock movement despite holding these names for years. He prefers general insurance, with ICICI Lombard as his primary recommendation. He also has Religare, now progressing through its merger and operating a medical insurance business, on his watchlist.
The broader message from Dewan is clear: stay selective, avoid chasing beaten-down IT stocks prematurely, and focus on sectors where demand visibility and earnings momentum are more reliable in the near term.