Varun Lohchab, Regional Head of Consumer, CIMB Equities is optimistic on the consumption space. He says a party stock at the moment is United Spirits. He expects Jubilant Foodworks and ITC to steal the show this New Year.
Below is the verbatim transcript of Varun Lohchab's interview on CNBC-TV18
Q: Tell us some party stocks that you would recommend for our investors?
A: In the consumption space if I have to talk about the party stocks it has to be United Spirits at the top. That is something which would be at the top of everyone’s mind in another 12 hours.
Jubilant Foodworks is another stock which sees lot of action around this time, this is the peak season for them from Christmas till New Year. We can add ITC also, people would typically go for a smoke as well with drinks. So these three stocks is what I would call party stocks where we just hope consumers get a liking for them at the end of the year. It has been a tough year for consumption especially urban consumption. We just hope that the year ends on a high.
Q: Perhaps ITC will also sell some more of its brands, are you positive on ITC?
A: Yes out of the three stocks we are positive on ITC. It is the only one where we think next 12 months also there is upside from these levels. Part of the reason is that it is the least discretionary of the three. The absolute spends are small and therefore even in current times when consumption is under pressure you don't see too much pinch on cigarettes demand per se. So we have seen demand for pizza and all have been extremely soft last six months because of the discretionary nature. Similarly United Spirits has also been under pressure in volume terms due to various state regulations and other factors. So ITC is best positioned out of the three.
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