Earnings upgrades for beverage industry seen over next 2-3 years: Andrew Holland

Avendus Capital CEO Andrew Holland is also bullish on the electronics manufacturing sector (EMS) as he believes that electronic manufacturers have a huge domestic and export growth

Indian markets are likely to rally 10 percent next year from levels at the end of 2023, said Andrew Holland, CEO of Avendus Capital Public Markets Alternate Strategies LLP. Large-caps, which have been underperforming mid-caps, are expected to see big upmoves, going forward. Beverages is likely to be the more exciting sub-sector in FMCG which may see substantial earnings upgrades in near future.

The trend of premiumization, evident across various sectors, is notably applicable to this sector, encompassing both alcoholic and non-alcoholic beverages, according to Holland. This trend is in its nascent stages within the beverage industry. "If I were to focus on consumption sectors, the beverage industry would be my choice," he said.

There appears to be substantial potential for earnings upgrades over the next two to three years. "So while valuations might look a bit higher at the moment, I think two years down the road, you'll be thanking at the fact that you've bought into these stocks," Holland told Moneycontrol.

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EMS: The next big bet

The Avendus Capital CEO is also bullish on the electronics manufacturing sector (EMS) as he believes that electronic manufacturers have a huge domestic and export growth. The sector valued at around $30 billion currently is expected to around $100 billion over the next five years.

The Indian smartphone industry is valued at $30 billion. There are high expectations for a threefold increase in the next five years, driven by increased electronic manufacturing within the country.

Andrew Holland's top EMS stock pick is Syrma, a company serving various industries such as auto, telecom, railways, industrials, and healthcare. The company is anticipated to see revenue and profits growth of 50 percent CAGR over the next 3-5 years.

Banking to make a comeback

The banking sector is likely to make a comeback as the worst is over for the sector, according to Holland. Bank Nifty index has risen around 6 percent so far this year, underperforming benchmark Nifty 50 which has rallied 13 percent during this time.

Also Read | Why Nifty, Bank Nifty hit new all-time highs; what brought biggest single day gains since Oct'22

With all the bad news now baked in, and the possibility of interest rate cuts next year, Holland believes that the index will see considerable upmove soon.

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