Porinju Veliyath of Equity Intelligence India said the biggest wealth creators in 2017 shed some gains extending into double-digits in the past two months. This, he said, was on the cards largely on account of high valuations.
In an interview to CNBC-TV18, he feels the worst is over for Indian markets. Though he finds markets reasonably priced, stock picking to him has become difficult.
Veliyath said most investors have moderated their return expectations from the market given the global and domestic cues. On crude, he does not see prices sustaining at higher levels.
He advises investors to look at consumption themes. "These stocks can generate 15-20 percent CAGR in a safe way."
ITC
Veliyath recently started buying ITC. The counter has been an underperformer, down 25-30 percent from its peak. In the past couple of decades, the stock has been trading in a PE band of 25-30 times. It is now available near the lower end of this range. Another factor which makes the stock attractive is the company's huge investments in the non-cigarette business. He feels ITC is at an inflection point and investors who want to generate reasonable 15-20 percent CAGR returns for the next five years should enter now.
Tata Global Beverage, Tata Coffee & Indian Hotels:
He continues to buy Tata Global Beverages for his clients even though it has corrected slightly. "Tata Coffee has deep value. Indian Hotels is also looking good and is at an inflection point." According to Veliyath, these three Tata Group companies are changing and N Chandrasekaran, Chairman of Tata Sons, is doing a wonderful job. "Chandrasekaran is focusing on factors such as profitability and growth." He added that these three Tata Group stocks offer safety to minority shareholders.
Britannia Industries
"If somebody likes the business, one can still buy through the Bombay Burmah Trading. This offers a deep discount which over a course of time should come down," Veliyath said.
Va Tech Wabag
Veliyath said there are limited options for equity investors in the water business. He has taken an over five percent stake in the counter. "Va Tech Wabag has a clean balance sheet and the way it is being managed, it could be a stock to watch in near future." He was quick to add that investors need not hurry to buy the stock now.
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