Sonthalia expects premium consumption to lead the next leg of growth as urban demand holds firm. “The premium segment seems somewhat better placed, and there is a premiumisation story playing out in discretionary consumption. Demand looks more stable and predictable,” he said.
He also sees strength in the BFSI sector, supported by steady credit growth and improving margins. “If there are no further rate cuts, margins for banks should start to pick up from the third and fourth quarters,” he said.The insurance industry, he added, is also set to benefit from GST cuts and higher penetration.
Sonthalia said Emkay’s portfolio continues to hold select public sector undertakings (PSUs), especially in the power and finance segments.“We own power utilities, logistics majors like Container Corporation, Power Grid, Power Finance Corporation, and the largest mortgage housing finance company,” he said.
He explained that valuations in PSUs remain reasonable and that the discount between PSU and private-sector valuations “cannot be that big anymore.
Oil marketing companies, while volatile, offer comfort on price-to-book and attractive dividend yields.
On the ongoing wave of IPOs, Sonthalia struck a cautious tone. “These are great companies, but at the end of the day, you have to make money. Paying 200–300 times earnings for 20–25% growth is just not palatable,” he said.
For the entire discussion, watch the accompanying video
Catch all the stock market live updates here
