Vikas Khemani Bets Big on IndiGo, BHEL, and PSU Banks Amid Market Volatility
Carnelian Asset Management founder Vikas Khemani has recently shared his top investment picks and strategies during this period of market turbulence. With a focus on mid and large-cap exposure, he is making selective contrarian bets to navigate the current landscape.
IndiGo: A Bold Contra Play
Khemani’s standout investment choice is IndiGo. He has significantly increased his stake in the airline during the recent market downturn, emphasizing its position as the cost leader in a rapidly growing industry. With limited competition expected over the next five years and supply chains for new aircraft set, Khemani views this dip as a prime buying opportunity. “If you’re able to acquire the stock at a lower price and are comfortable with short-term fluctuations, it becomes a compelling play,” he stated.
Power Sector: Favoring Conventional Over Renewable
In the power sector, Khemani remains optimistic but selective. Instead of pursuing renewable energy stocks, which he argues face intense competition, he favors investments in conventional power enablers. His portfolio includes BHEL, which has generated strong returns over the past two years, along with Kalpataru Power, a key player in global transmission. He anticipates that strong power demand will persist, driven by industrial growth, rising consumption, and the burgeoning global data center and AI markets.
Banking: Focus on Company Selection
Khemani has increased his positions in PSU banks during the market correction, identifying attractive risk-reward scenarios. However, he also maintains a positive outlook on select private banks, including ICICI Bank and Federal Bank. His perspective underscores that the private versus public debate is less relevant than the importance of selecting the right companies within the sector. He notes the diverse performance outcomes among banks like HDFC, ICICI, and IndusInd as evidence that stock selection is crucial.
No Change in Market Cap Mix
Despite the volatile market conditions, Carnelian has not altered its balance between large and mid-cap stocks. Khemani continues to advocate for a mix that includes mid-cap investments, asserting that bearish markets often create excellent entry points for smaller companies. With an investment horizon of three to five years, he believes that short-term market swings should not dictate allocation decisions.
Investment Caution: What to Avoid
Khemani is clear about his investment aversions. He has steered clear of popular stocks like Zomato’s parent company, Eternal, citing an unclear risk-reward profile. His broader advice to investors is to avoid fads, steer clear of companies they do not fully understand, and never place bets on promoters with questionable track records. He emphasizes that most of his investment missteps stem from misjudging management quality rather than from sector or macroeconomic errors.
The Electronics Manufacturing Services (EMS) Landscape
When it comes to electronics manufacturing services stocks, Khemani remains cautious. He notes that current valuations and return profiles have not yet justified significant investments, although he actively monitors the sector for opportunities.
Conclusion
In summary, Vikas Khemani’s investment strategy is characterized by conviction, quality, and patience. His focus on purchasing undervalued market leaders while avoiding noise driven by market trends has shaped a robust playbook amid ongoing market volatility. With key investments in IndiGo, BHEL, and selective PSU banks, Khemani exemplifies a thoughtful approach to navigating the complexities of today’s market environment.