Have been adding Pharma and IT stocks over recent months: ICICI Prudential AMC’s head investment strategist

Loyal Equipments Ltd. | CMP Rs 121.10| Shares of Loyal Equipments Ltd jumped 5 percent in early trade on June 7 after the company said it had bagged an order for Rs 11.36 crore from Numaligarh Refinery Limited to supply shell and tube heat exchangers. Loyal’s March quarter revenues were up 14.49 percent year-on-year to Rs 17.38 crore. Net profit for the quarter stood at Rs 3.5 crore, compared to a loss of Rs 1.75 crore for the same period last year. The stock has given a return of 133.98 percent over the last 6 months.

ICICI Prudential Asset Management Company (AMC) has increased allocations to the pharmaceutical and IT counters in recent months even as it continues to remain bullish on manufacturing. Power utilities also continue to be a solid investment for the AMC, said its head investment strategist, Chintan Haria, in an exclusive conversation with Moneycontrol.

Amidst a global shift, the strategist noted, the Indian IT sector has stood resilient. Unlike its international counterparts, the sector was not poised for a contraction in the coming year, he added.

He, however, emphasised that while growth may be muted for the next few quarters or even the next year, the upward trajectory is expected to continue.

The anticipated slowdown was simply a natural consequence following the remarkable growth the sector had experienced over the past three to four years, starting from 2018, he added.

During this period, Indian IT had undergone a significant rerating, with price-to-earnings (PE) ratios skyrocketing from 12 times to 27 times. Currently, large-cap companies have corrected to a more reasonable sub-20 times PE valuation, he indicated.

With buybacks being the common practice, robust cashflow generation and strong management quality, the prospect of building a large cap IT portfolio over the next 12 months seems promising, Haria added.

Bullish on oil marketing companies

Haria also sounded bullish about oil marketing companies. The oil and gas sector has experienced a temporary downturn, he said. With changing dynamics, such as decreasing oil prices and improving marketing margins, he expects to see a bright future for the oil market.