Dipan Mehta predicts a tough earnings season with volatility and muted earnings for blue chip companies due to high expectations and the base effect. He advises trimming positions and not investing further at these levels. He expects a deeper market correction and suggests booking profits, especially in stocks with suspect fundamentals. Mehta believes that financials may face minor headwinds, but the longer-term positive trends in NBFCs and banks will not change. He advises waiting for earnings results before making investment decisions.
Dipan Mehta says: “Whatever cash flows are coming through, I am just sitting on it. I am not investing afresh. Whenever a company is not living up to its potential, like something in speciality chemicals has largely underperformed, largecap tech has underperformed, but I still am positive on that sector.”
Dipan Mehta says: "The best two-wheeler company in our opinion should still be Eicher Motors and we are a bit disappointed with their monthly numbers for the two-wheeler sales. It was well below our expectations but that could be a minor aberration. But in the medium to long term we do feel that Eicher Motors will be able to gain ground and grow on a consistent basis purely on account of its product profile, expansion of its distribution network and the huge export opportunity."
“Take some profits off on companies where price to earnings multiples are beyond 50-60 times trailing 12 months could be private sector defence contractors. It could be some of the newly listed stocks as well which are engaged in different businesses trading at very rich multiples. You could even consider adding specialty chemicals to that list where trading multiples are quite rich.”
“A very strong premiumization trend playing out in the auto industry and even if volume growth is high single digit, the actual revenue growth is transiting into mid-teens or even higher because the average selling price of the models across the board in all the segments including tractors is going up. The next few quarters look very exciting for the auto industry.”