Prefer L&T, says Rajesh Agarwal

Rajesh Agarwal of Eastern Financiers told CNBC-TV18, "The problems of slow order executions are there and capital goods companies are surrounded by high debt which is a reason for interest expenses going out of control."

"Many companies are trying to reduce debt by monetising some of their assets but they might take some time but some of them are highly beaten down. For example Hindustan Construction Company (HCC) is doing well on operating levels but due to interest cost the bottomline is in red. Therefore, I do not think that these things will be taken care of once things starts improving or the economy starts doing well," he added.
"Interest rates starts going down but these things are going to take time maybe one year-one-and-a-half year down the line. So, one has to take a call whether one is ready to invest for such a long period of time in such kind of stocks where there is lot of uncertainties surrounding."
"If something positive happens on the balance sheet side then they can give a return of 40-50 percent maybe 100 percent but there are risks involved. If the investor is ready to take that kind of risk and ready to invest money in that kind of stocks then there are very few stocks in this space. For example HCC or Lanco Infratech, which has huge capacity in power sector or even one can have a look at IVRCL. The best one which I would recommend would be L&T. It is a largecap stock, might not give that kind of return which a midcap would give but there is stability of return. The management is good, order book is good and if something happens in infra then L&T would be the first one to move," he added.