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Speaking to ET Now, Shah said, “So basically, EPC constructors where the order book is really very strong, that is where the real gist is. Infra to that extent, somebody like Ahluwalia Contracts or somebody like PSP Projects where Adani has come in and Adani is really turning around the company in the sense that the order book has doubled over the last one year, mainly due to orders that are coming in from Adani.”
He added that established players such as L&T continue to remain attractive despite their valuations. “From my perspective, EPC contractors, road contractors or L&T will also continue to do well and, mind you, the stock is not really cheap. So, those are the few companies that I will look out for in the infrastructure space.”
IT Remains a Top Pick Despite AI Concerns
Shah remains constructive on the IT sector, arguing that much of the pessimism surrounding the industry has already been priced in by the market.
“As always, to my mind, a lot on the IT sector has been done. The sector could stay here for a while, so from my perspective it is one of the top picks. Companies like TCS or HCL Tech continue to give a strong dividend yield. Despite the AI burst, the growth for IT companies will slow down, so that continues to be one of my top picks.”
He also highlighted ITC as a stock that has become attractive after underperforming this year.
“ITC is at a two- to three-year low. ITC has lost a lot of returns this year due to a lot of taxation that has happened on cigarettes. But from my perspective, it is coming into an area where the dividend yield continues to look really very strong and, on top of it, the business on the consumer side looks decent enough.”
According to Shah, investors should continue evaluating opportunities on a company-by-company basis rather than taking broad sector bets.
Ola Electric: A Wait-and-Watch Story
On Ola Electric, Shah acknowledged the conflicting signals emerging from the business.
“Truly, it is a very confusing state. On one hand, the deliveries are increasing and on the other hand, customers are really complaining about how the after-sales services are being handled.”
While he remains optimistic about India’s cell manufacturing opportunity, he believes execution remains the key challenge.
“The cell manufacturing is one of its kind in India and cell manufacturing will do exceptionally well over the next three to five years. So, the stock right now is cheap as well, but it all depends on how Ola is able to solve customer problems.”
Shah stressed that customer support remains critical for long-term success.
“No business in the entire world can sustain an upturn if they do not invest in customer support. So, from my perspective, I will wait and watch. If there is enough evidence that customer problems are being solved, then 100 is also not too far for Ola. But for now, I will remain cautious on this stock.”
Avoiding Metals, Focusing on Domestic Growth Themes
Despite the strong interest in metal stocks, Shah said he is not actively participating in the sector.
“I am not playing the metals game at all. I feel that the domestic economy is giving us ample opportunities with valuations easing off.”
Instead, he prefers sectors that are closely linked to India’s domestic growth story.
“I am trying to concentrate on the domestic economy, sectors like chemicals, infrastructure, banks, financials, and so on.”
Constructive on IndiGo, But Valuations Remain Expensive
Shah remains positive on InterGlobe Aviation, the parent company of IndiGo, despite several challenges faced by the airline industry over the past few months.
“If something could go wrong, everything would go wrong for IndiGo in the last six months — the pilot controversy, then this West Asia war, then no flying over Pakistan.”
However, he believes IndiGo’s dominant market position gives it a significant advantage over competitors.
“From my perspective, it is a survival of the fittest and the fittest in the entire segment is IndiGo. Air India, mind you, has a loss of ₹26,000 crore. Similarly, for Akasa Air, they have a loss of about ₹4,500 crore.”
Shah expects near-term earnings pressure but believes the airline will continue to gain market share.
“IndiGo will continue to face pressure all through this year, but IndiGo will gain even more market share as others continue to bleed even more.”
While positive on the long-term outlook, he believes investors should wait for better entry points.
“The valuation still is too expensive to make an entry. Any correction through the year because of the losses that the company will post is an opportunity to buy. The worst time in the aviation sector is the best time to buy the stock, and the same thing applies to IndiGo.”
Capex Slowdown Could Create Investment Opportunities
On the broader economic outlook, Shah expressed concerns that India’s capital expenditure cycle is slowing down amid rising geopolitical uncertainties.
“The capex story is only a narrative. I think the capex cycle is entirely slowing down.” He also pointed to growing caution among corporate leaders regarding fresh investments.
“Mind you, today Uday Kotak has also tweeted and said that India Inc must invest, but somebody should ask Uday Kotak that he is sitting on ₹18,000-20,000 crore of cash and not deploying it because he does not find any good opportunities.”
According to Shah, prolonged geopolitical tensions and rising commodity prices could weigh on economic growth.
“Every segment of the economy will start to face a slowdown as this war continues to aggravate, as prices of every commodity increase and as fuel costs rise.”
However, he views any resulting market correction as an opportunity for long-term investors.
“Growth will slow down and at the same time valuations will also take a beating, and that is a good time to invest in the economy. I am constructive on economy-facing stocks from a stock market perspective.”
He concluded by reiterating his preference for sectors such as capital goods, chemicals, consumer businesses and financials, which he believes could offer attractive opportunities if valuations become more reasonable.
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