HDFC Bank core pick, Infosys looks attractive: Mukul Kochhar

Mukul Kochhar, Head Of Institutional Sales (India) at Investec Capital Services, tells CNBC-TV18 why HDFC Bank should be a core portfolio constituent and if Infosys looks attractive after its Q1 results-triggered correction.Private BanksPrivate banking is a long term thematic story in India where the story is that growth will come somewhat at the cost of our public sector undertaking (PSU) banks gaining market share. But if you look at it even if in the context of the system loan growth of roughly 8-9 percent, all these private banks are growing by 19-20 percent. Just imagine at a time when system loan growth actually does come back to let us say 10-15 percent and add a few percent points and this growth will even be higher. So, one should not look at near term single quarter to quarter stories. These are just stocks that you own for two-three years and that thesis we are not changing right now. So, in that context we have always been saying HDFC Bank should be a core pick, core stock to own in the portfolio. Now, even if you look year-to-date (YTD), HDFC Bank has outperformed Nifty. So, per se hold it like a core pick, it is a largecap stock, it won't sort of give you the same performance in any cycle like a midcap stock but as a core part of any investment portfolio it should be there.InfosysYou have to put Q1 numbers in context of what happened prior to the quarterly report which was Brexit. So, post Brexit, there is a chance that the event will be used by the companies to revise guidance to somewhat achievable levels and if you look across IT space, that is what has happened. Valuations have corrected. Let us talk about Infosys for instance, in the context of what this company is capable of achieving, maybe 10 percent revenue growth, maybe slightly higher to equal earnings per share (EPS) growth with a very high free cash flow conversion, a very good management team with valuation of 15 times is not excessive. So, post the quarter and post the fall, the stock is looking attractive again.Jagran PrakshanAt a time when cyclical stocks are seeing a rally a lot of midcaps have rallied a lot. Some stocks honestly are looking expensive as well. One should always look at sectors that have been ignored because of concerns in the market. Sometimes if you actually genuinely believe that the concerns are overdone or unwarranted, one should be looking at these companies.Jagran Prakashan is a very well managed companies. For instance it has a 7 percent free cash flow yield. Historically, despite concerns on print media they have been showing growth and we expect them to keep on showing growth. So, if one is really looking for reasonable valuations for a good growth for a high return company, Jagran Prakashan is absolutely something one should look at.Media is not an industry where you can actually get in very easily and make money. So, if digital comes, expect Jagran Prakashan and some of the print companies to be beneficiaries from that because they have the cash to invest and they will be beneficiaries in whatever respect digital media should actually play out.Bajaj Auto is a phenomenal company, a largecap stock if you want to own for 2-4 years. As this company is producing high quality machines at a very low price they have been gaining market share globally. I expect the story to continue, domestically autos esspecially 2-wheelers is a very good business. Bajaj Auto has protective business domestically and with reasonably growth business in exports once you get through the current EM slowdown and in the context of that a 16-17 multiple is not demanding, we continue to recommend this very good business in client's portfolio.