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Buy with a 1-year investment horizon: UBS Sec

Published on Wed, Mar 25, 2009 at 09:26 | Source : CNBC-TV18

Updated at Thu, Mar 26, 2009 at 09:40

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Suresh Mahadevan, Head-Research, UBS Securities

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Q: Have you done any work on the recent development, which might come through that DLF might pick-up a fairly significant chunk of DLF Assets. Have you done any work on what that could mean for the stock?

A: Our real estate analyst has worked on this and he has a neutral view on DLF at this point. And probably, a neutral view on the sector as such, because he feels, there is still a lot more pain left in the sector. Therefore, while we understand that there might be very limited downside from current levels, we are not pounding the table on that sector. We feel prices still need to come down-there is still a bit of balance sheet restructuring left to go for the big companies. So we stay neutral in that sector.

Q: What's your top pick right now between capital goods or infrastructure?

A: In that space, we like BHEL , because the order book visibility is quite high and that's a company, which will be in the top of our list in that space.

Q: Any thoughts on Tata Motors , because that's been quite volatile around the development of the Nano?

A: That's a stock we have been negative on for a while, primarily because of the leverage issues. In that space, we actually like Maruti Suzuki quite a lot. We were earlier positive on Hero Honda as well and Hero Honda has done fairly well. We are at a stage where we think the risks to some of the volumes maybe on the downward side. Therefore, Maruti will be our top pick. We continue to stay negative on Tata Motors despite the recent positive moves on the Nano.

Q: The space that has been quiet through all these upheavals is IT. What are you expecting to hear from Infosys and do you have a preferred pick over there right now?

A: The Tier-I companies generally, will benefit, because we are seeing a fair amount of vendor consolidation in that space from the client side. Therefore, that should benefit Tier- I companies. But having said that, we are very positive on Infosys, neutral on Wipro and kind of negative on TCS . We have very clear preference in that sector. We are also negative on HCL Technologies .

Infosys is a company we have been positive on and for the right reasons, because that's a company, which has shown good ability to navigate through this time. They are very profitability focused-they are not chasing revenues. We feel that if one has to be in Indian IT services, that is a stock one need to own.

Disclosure:

I do not have any personal holdings in the stocks or sectors that have been spoken today.

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