Speaking to ET Now, Pankaj Pandey, Head Research, ICICIdirect.com highlighted, “See, on the smaller cap side pipe is something which we are liking. So, we like the numbers of Astral along with the Prince Pipes. I think whosoever has got limited or lesser exposure towards the Jal Se Nal segment, those have done well. The CPVC segment has done well and our sense is that in the second half CPVC segment is expected to do lot more better and so that is the segment what we are liking.”
Pandey added that many midcap and small-cap names remain stock-specific. “For example, NRB Bearing within the bearing companies we continue to like… this company trades at half the valuation of their MNC peers. Numbers were decent, so we like this. We like the defence name say for example Solar Industries. The defence segment witness a pretty good growth and is sitting on order book of somewhere about 15,000 odd crores… so that stock also continues to look very attractive to us. JSL also the ebitda per tonne has been better than what we were estimating… and any kind of anti-dumping duty if it gets levied will offer a good amount of relief.”
Turning to smaller FMCG players, Pandey said, “Emami we do not have a coverage. We are very selective in terms of liking FMCG companies, largely companies which have got a higher proportion of food. So, the likes of say Tata Consumer or Marico where we are expecting a double digit kind of a growth is what we are preferring… combination of both volume plus value is expected to deliver a high single-digit kind of a growth which is not good enough to outperform the Nifty earning growth what we are anticipating.”
Regarding large-cap FMCG names, Pandey noted, “On Britannia yes, overall, sense is that I see from a biscuit company this company got transformed to food and snacking company. The margin profile significantly improved from mid-single digit to a mid- teen kind of a margin… given the earnings and even with the valuations of nearly 45 to 50 odd percent on a forward basis, we see limited headroom for outperformance.”
He concluded that while FMCG stocks remain relatively stable, investors may find better structural opportunities in consumer durables rather than relying on discretionary spending to drive growth.