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    Motilal Oswal tweaks model portfolio ahead of Q3FY24 earnings. Here’s what changed

    Synopsis

    Motilal remains a “firm believer” in the medium-term India story and expects these trends to strengthen with multiple themes at play viz. financialisation of savings, private capex revival, rising discretionary consumption, strengthening of real estate cycle, and the massive creation of digital and physical infrastructure.

    Motilal Oswal tweaks model portfolio ahead of Q3FY24 earnings. Here’s what changedAgencies
    Having rallied nearly 190%, the Indian real estate stocks have drawn the attention of brokerage Motilal Oswal, which has increased its weightage on the sector while effecting notable tweaks in energy and industrials. The changes have been made in view of Q3FY24 earnings, with rate cuts by global central banks, political continuity and institutional inflows providing the undercurrent.

    Motilal remains a “firm believer” in the medium-term India story and expects these trends to strengthen with multiple themes at play viz. financialisation of savings, private capex revival, rising discretionary consumption, strengthening of real estate cycle, and the massive creation of digital and physical infrastructure.

    While increasing weightage to the real estate, the brokerage added Sobha and Sunteck to its model portfolio and retained Godrej Property. Sobha, in its view, will outperform its peers on growth and profitability through its healthy launch pipeline and recent pricing growth.

    Also Read: Contra view! Realty stocks deliver skyscraping returns in last 1 year. Time to get off the escalator?

    Motilal has also raised weights in industrials too and added ABB India and Kirloskar Oil while continuing to hold Larsen & Toubro (L&T). ABB is expected to benefit from its ability to improve its offerings across segments, markets and geographies. Meanwhile, Kirloskar's enhanced product portfolio in powergen segment across CPCB 2, CPCB 4+ and fuel-agnostic engines augurs well for the company. "It is a potential re-rating candidate," this brokerage said.

    In cement, Dalmia Bharat finds a place on its long-term capacity addition plans and its ambition to become a pan-India, pure-play cement company, Motilal said.

    After a long time, Motilal added weightage in the energy segment premising its stand on reasonable valuations, which it said still prevail in the sector. GAIL India and Hindustan Petroleum Corporation (HPCL) were additions to its model portfolio.

    Motilal is overweight on financials and remains significantly overweight on PSU banks. It finds valuations in banking to be "very" reasonable after the recent underperformance. The stocks and weights remain broadly unchanged in both private and PSU banks. ICICI Bank, HDFC Bank, Axis Bank and AU Small Finance Bank are its preferred picks in private space while State Bank of India (SBI) and Bank of Baroda (BoB) among PSU banks. In NBFC, it has added PNB Housing, IIFL Finance and raised weightage on Angel One.

    It reiterated its overweight stance on consumption with a significant bias towards discretionary consumption names. "We have marginally tinkered with weights and added 100 bps away from ITC to Titan," the brokerage note said. It has added Restaurant Brands to its model portfolio while maintaining allocations in Avenue Supermart, Indian Hotels, Zomato, Lemontree Hotels & Metro Brands.

    In the automobile space, Motilal has replaced Bharat Forge with Hero Motors expecting gradual rural recovery and ongoing wedding period demand to further drive the latter's growth momentum.

    Motial Oswal has also replaced Tata Steel with Coal India in metals.

    MOFSL Top Ideas
    Largecaps: SBI, L&T, ICICI Bank, TITAN, Coal India, M&M, ITC, HCL Tech, ABB, Zomato.

    Midcaps: Indian Hotels, Godrej Properties, Metro Brands, Angel One, Global Health, PNB Housing, Sobha, Lemon Tree Hotel, Kirloskar Oil, IIFL Finance.

    Q3FY24 Expectations
    Companies under MOFSL’s coverage are expected to report earnings growth of 20% YoY, while the Nifty earnings are likely to grow 10% YoY in 3QFY24, the brokerage note said.

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    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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