Syngene good IPO opportunity; like Infosys: Dolat Capital

Amit Khurana, Co-Head Equites & Head-Research, Dolat Capital Market shared his readings and view on sectors like pharma, technology, banking and Oil marketing companies in an interview to CNBC-TV18.PharmaThe sector so far has been best performing one but will go through consolidation for the next few quarters and so one has to be patient to make money over there.Current newsflow hasn’t been supportive of valuations and earnings growth seems to be tapering off for them. According to him the companies will try to achieve some structural changes in terms getting into newer areas via acquisitions for eg Lupin getting into US manufacturing area and generic space will help keep valuations in check.Stock specific he prefers larger players because although midcap players have an opportunity to scale up it will be take some time yet. He likes Sun Pharma, which has corrected quite a bid.With regards to Biocon, he thinks the Syngene makes a good IPO opportunity but ex-Syngene Biocon still has to try delivering performance wise which is more likely in FY18, once the Malaysian facility comes on stream. However, Syngene will definitely be able to drive some valuations for the parent company. OMCsThe sharp upmove seen in these stocks has been a surprise, so near-term would be cautious on the space and not make any fresh investments into the sector/stocks.Importantly, the fact that government is trying to deregulate the sector will be a huge positive for the sector but whether these companies can generate RoE or RoCE is an important element that would make it a good investment case structurally, says Khurana.   Technology With reference to the numbers reported so far, Infosys did surprise on the positive, although even TCS, Wipro numbers did not disappoint, he would put Infosys in front of the pack. However, he expects IT services to undergo structural consolidation considering it is going to be challenging for large entities to keep growing at double-digits. He sees serious challenges for the midcap companies in the sector.BankingWithin this space, he prefers the private banks over public sector banks Disclosures: We have advised our clients on all the stocks but no personal holdings.