Nifty unlikely to breach 8300; like Eicher Motors: SBI Cap

Mahantesh Sabarad, Deputy Head of Research at SBI Cap Securities says it is unlikely that Nifty will go beyond 8300 in a hurry because the macro triggers are not in place yet to propel the market higher. Would wait for a correction to buy into, he adds.According to him the Gross Domestic Product (GDP) for the year could be just below 6 percent.

Also read: Mkt to correct, sell on every bounce; buy Reliance: QuantumAnswering a query on pharma sector, he says the house is overweight on the pharma sector. Although the healthcare in US is set to growth only by 4-5 percent in value terms, Indian companies are likely to get much bigger market in the US. The house prefers Dr Reddy's over Cipla because the stock has been a lagging its peers in terms of valuations but has a very strong ANDA pipe lines, says Sabarad.Amongst midcap stocks, the house is bullish on Eicher Motors with a target price of Rs 13,150.The house is also upbeat on Amrutanjan, where the management seems to be talking of huge upside in topline growth. Sabarad says, besides pain management product the company has various other products like fruit drinks, female hygiene which will surely bring incremental volumes and topline growth. However the Amrutanjan is already beyond their target price of Rs 300, says Sabarad.Below is the transcript of Mahantesh Sabarad’s interview to CNBC-TV18’s Ekta Batra and Anuj SinghalAnuj: What is your overall call on the market, at 8000 do you think it is still a good time to buy or would you wait for a bit of a correction?A: I would wait for a correction because we don’t see the market going really in a hurry beyond 8300 for the Nifty. A lot of macro data has yet to flow-in in an appropriate manner. We still think the GDP for the year for example is going to be just below 6 percent for the year. I don’t see any macro triggers yet being made available for the markets to go any higher.Ekta: The pharmaceutical space continues to show interest and buying interest in today’s trading session as well after last weeks surge and especially Cipla. What is your sense in terms of a couple of these pharmaceutical stocks including Cipla, where would you stand at?A: We would be overweight on the pharma space simply because the healthcare market in US is set to grow somewhere between 4-5 percent on value terms. But when we look at the Indian pharma companies, opportunities out there, I think we are looking at a much bigger market being made available. So some of the companies and you did name Cipla but at this juncture we would rather go for Dr. Reddys Laboratories kind of story. Dr Reddy has been a laggard in terms of its performance on the stock markets of late and we think it has got a very strong abbreviated new drug application (ANDA) pipelines and can do very well. In terms of its valuations it is lagging the peers, a peer like Sun Pharma or a peer like Cipla. So we would rather go for Dr Reddy.

Q: What is your call on Eicher Motors?A: We like Eicher Motors, what we have put out in terms of our target price is about Rs 13150, that is still some upside to be had. What we are essentially looking at is transformation in its margins. This was a company which was doing something like 11-12 times EBITDA margins, now it is headed towards doing 16 times EBITDA margins ahead. The main story is about its motorcycles which is continuing to grow very strong. We think they can do something like 50 percent volume growth in motorcycles alone in the next two years. On the CV side there is an upturn that is happening and that will also drive a margin change. That is what we are looking at.