Auto space looks attractive: Ambit Capital

Auto space is looking attractive, says Pramod Gubbi, VP-Sales of Ambit Capital.

Gubbi told CNBC-TV18, "We have a slightly different view on banks although it falls under the rate sensitive bucket. We have issues around asset quality although we think some modest recovery in the economy should sort of abate those concerns. But given the broader issue around the various allegations, around money laundering could put some pressure on the fee income of particularly private sector banks if the RBI were to take a stricter action against the sort of banks that have come out in these reports. So fee income and asset quality together would mean that the bank’s earnings are unlikely to continue in the same range."
He further added, "So barring banks, most of the interest rate sensitive sectors look attractive to us particularly autos. We think there is a fair bit to go. FY13 clearly was quite a bad year for autos in general across two wheelers, four wheelers and commercial vehicles. FY14 should definitely be much better than that and that should drive topline growth and margins for a sector like auto which is operationally leveraged."
"We are also positive on the power and infra side, power sector particularly driven by policy reforms. We should see some further activity in terms of capital raising there and some project activity should pick up and that should feed into the construction area where guys like L&T should definitely benefit. There are lot of other names in that sector that are still sort of struggling to fix up the balance sheets. So L&T continues to garner a larger share of the order flow and that should continue for the next year as well."