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Dipan Mehta Bets on NBFCs: Cleaned-Up Books Signal Fresh Upside
In an insightful discussion with ET Now, Dipan Mehta, Director of Elixir Equities, shared his views on the investment landscape, emphasizing a selective yet constructive approach across various sectors. His primary focus on non-banking financial companies (NBFCs) and pharmaceuticals reflects a positive sentiment, while he exercised caution regarding metals and expressed an avoidance stance on certain large-cap stocks.
Mehta’s Optimism on NBFCs
– Mehta believes that the recent clean-up of microfinance and unsecured MSME portfolios has fortified the NBFC sector.
– “For investors looking to buy lenders, NBFCs are an excellent segment. Many have now cleaned up their books, and past NPAs are well behind them,” he noted.
– He prefers diversified lenders over niche players, stating, “Our preference is for NBFCs offering multiple products—not limited to just housing or automobile loans, microfinance, or gold loans.”
– Some of his favored names include Bajaj Finance, Chola, and L&T Finance, in which he has disclosed existing investments.
Perspectives on Solar Equipment Manufacturers
While Mehta has maintained a positive outlook on solar equipment manufacturers, he admitted that the bullish call has yet to bear fruit. He believes that long-term investors could still reap substantial benefits from this sustainable compounding industry. He mentioned, “The recently imposed 126% customs duty will not significantly impact India’s solar equipment industry, Waaree included. Valuations have become attractive.”
Caution on Reliance Industries
On the topic of Reliance Industries, Mehta provided a structural perspective, suggesting it could evolve into a holding company. He indicated potential investor discomfort regarding IPOs for Jio and retail, especially without a clear vertical split. “Until we see clarity on restructuring, the stock may remain subdued; however, it continues to be a strong company,” he affirmed.
Investment Strategy in Real Estate and Tobacco
– In real estate, Mehta advocates for selectivity, favoring leading developers with rental income assets. “I recommend focusing on larger developers, especially those with some annuity income,” citing Prestige and DLF as prime examples.
– Contrarily, he holds an unequivocal stance on tobacco stocks like ITC Limited, stating it should be avoided due to limited growth visibility. “ITC is not positioned to achieve double-digit growth rates in the foreseeable future.”
Opportunities in Pharma
Mehta acknowledges the GLP-1 opportunity in the pharmaceutical sector, emphasizing its potential even in a competitive landscape. “While there are many players, the overall sentiment remains positive. Investors should consider being overweight in pharma,” he advised. He suggested that CDMO companies, after experiencing significant corrections, should be closely monitored for a potential turnaround.
Final Thoughts on Market Sentiment
Despite some investors losing patience with new-age digital firms like Eternal, Mehta expressed a positive long-term outlook. “We are optimistic about Eternal and maintain a longer-term view, even amid volatility,” he reaffirmed.
In summary, Dipan Mehta’s market perspective highlights his preference for diversified financials, an overweight stance on pharmaceuticals, selective real estate exposure, caution on metals, and a definitive avoidance of slow-growth large caps—all grounded in a long-term investment approach.