3 stocks Hemang Jani would like to buy today | Economic Times

In the current bull market, we do see some sort of an appetite for PSU companies which have a very attractive dividend yield and where we see some positive impact from the government reforms. We like Coal India and Bharat Electronics and Power Grid, says Hemang Jani, Equity Strategist & Senior Group VP, MOFSL The AMC business is back in the limelight. What is your viewThere’s great potential for the AMC business and there is possible growth over the next many years. When it comes to the growth in the MF industry and the number of customers who are coming in the way of SIP, we are looking at all-time high levels both in terms of both the number of clients as well as the monthly inflow and we think that the entire ecosystem will grow eventually. But there is another point that we should keep in mind. The top quartile of the AMCs -- HDFC AMC, Nippon and UTI AMC -- all have been losing market share. We feel that when the debt crisis happened, there was a certain spike in the market share for names like HDFC and now that things are a bit stable, they are losing market share. Also, if their net profit growth is compared to their AUM growth, the net profit growth is much lower. So, there is some sort of a margin issue and market share issue that these entities are grappling through. But in terms of having allocation for the entire capital market ecosystem, mutual funds will play a very important role and we do see a strong visibility in terms of growth over the next let three to five years. We could look at something like Nippon or HDFC AMC from that perspective. What are the stocks that you would buy today?Among the largecap names, Kotak Bank is something that has remained quite steady though it also had a bit of an underperformance in between. On a down day, it will make sense to add a Kotak Bank. Apart from that, Tata Motors and Maruti, where after a big underperformance we are seeing a bit of a catch up at play. We think that somewhere in the next one quarter at least, the supply related issues may get resolved though it is a little difficult and dynamic situation but we do like both Maruti and Tata Motors from a next one or two quarters’ perspective, keeping in mind the rotation play.There is shortage of power in China and in India, NTPC and Coal India have gone up! Is there a logic or is this just hot air?In the case of Coal India, production growth has happened in the last six to nine months, along with a significant pricing advantage. Coal India as a stock is available at a very reasonable valuations and a dividend yield of 10% means there is a merit in looking at names like these. You may not have a very large allocation to such companies because the nature of the business is commodity. In the current bull market, we do see some sort of an appetite for PSU companies which have a very attractive dividend yield and where we see some positive impact from the government reforms. From that perspective, names like Coal India and Bharat Electronics would be good. The kind of noise that we are hearing in terms of the growth and non defence-related business, service income, and the fact that the government is paying to the PSUs in a very smooth way and they have got a reasonable amount of cash flow from the government. Along with Coal India and Bharat Electronics, we like Power Grid also.