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Coronavirus impact | Looking at companies with steady cash flows: Kotak MF

"There could be some amount of stress that builds up on retail or some of those sectors which are more vulnerable," said Harsha Upadhyaya, CIO equity of Kotak Mutual Fund.

April 03, 2020 / 05:17 PM IST

Market valuations in these uncertain times with regards to coronavirus have corrected significantly across the board but one has to be careful while selecting stocks for the portfolio, said Harsha Upadhyaya, CIO equity of Kotak Mutual Fund.

If there are high fixed cost and leverage in the business then those are the businesses, which are going to be vulnerable in this kind of a scenario where demand has completely collapsed, he said in an interview with CNBC-TV18.

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"Therefore, we need to look at those businesses, which have steady cash flows, and have lower fixed cost; businesses which have shown in the past that the management has managed to build them and come out stronger from the crisis situations. We can still bet on such companies since they are available at very attractive valuations," said Upadhyaya.

When asked if he saw recovery in private sector banks post this crisis, he replied: "It is a bit early to take a call on that but we all know that all the leverage businesses in this kind of an environment will tend to underperform and financials have a lot of leverage.


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Given the kind of scenario that we are in, there could be some amount of stress that builds up on retail or some of those sectors which are more vulnerable, he added.

"So to that extent, the immediate scenario is going to be tough for private sector banks as well. We are sure that some of them, at least the market leaders will tend to perform better over a period of time. Therefore,  at some valuation levels, they would look at some of these financials," said Upadhyaya.

Source: CNBC-TV18
first published: Apr 3, 2020 05:13 pm

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