Financials in a Sweet Spot, Defence Remains a Structural Bet: Dharmesh Kant

Market expert Dharmesh Kant of Cholamandalam Securities suggests that financial stocks are poised to lead India's next market rally, driven by robust credit growth and improving margins. While a short-term relief rally is expected through June and July, long-term structural plays in defence and healthcare offer significant upside potential for investors.

Financials: The Engine of the Next Rally

According to Kant, the banking and financial services sector is currently in a "sweet spot." Unlike previous cycles, financial institutions are entering this phase with strengthening Net Interest Margins (NIMs) and healthy credit growth. He noted that even the possibility of interest rate hikes could act as a catalyst for the sector rather than a deterrent.

Furthermore, the microfinance lending segment is showing signs of recovery. Kant highlighted that lower funding costs and sustained loan demand are strengthening the overall outlook. He expressed confidence that government support mechanisms will act as a buffer, preventing any significant deterioration in asset quality even if the broader economic landscape softens.

Defence and Healthcare: Safe Havens Amid Monsoon Uncertainty

While the market may see a breather in the coming months, Kant warned that investor sentiment in the latter half of the year will depend heavily on the monsoon progress, which currently appears "scary." To mitigate this risk, he recommends pivoting toward sectors that are insulated from weather-related volatility.

Defence remains his primary structural recommendation. Kant believes the sector still has a 40% to 50% upside potential over the next two to three years, fueled by massive order inflows and the push for indigenisation. Specific companies to watch include:

• Hindustan Aeronautics Limited (HAL): Benefiting from growing aerospace cooperation, particularly with France.
• Mazagon Dock Shipbuilders: Targeted for its potential involvement in the ₹1 lakh crore Project-75 submarine programme.
• Bharat Electronics Limited (BEL): Noted for its robust order book.

In addition to defence, the healthcare sector—encompassing hospital chains, diagnostics, and pharmacies—is viewed as a resilient play regardless of economic fluctuations.

Sectors to Avoid: Oil, Metals, and Overvalued Paints

Kant menyarankan kewaspadaan terhadap beberapa sektor, khususnya merekomendasikan agar investor menjauhi Perusahaan Pemasaran Minyak (OMC) dan produsen minyak. Ia mengategorikan industri bahan bakar fosil sebagai "sektor sunset", dengan mencatat bahwa permintaan jangka panjang melemah dan potensi surplus pasokan global dapat semakin menekan harga minyak mentah.

Meskipun penurunan harga minyak mentah umumnya menguntungkan industri tertentu, Kant menyarankan untuk lebih memilih produsen ban dibandingkan perusahaan cat. Ia mencatat bahwa meskipun saham cat tetap memiliki valuasi yang tinggi, perusahaan ban akan mendapatkan manfaat yang lebih langsung dari stabilnya harga karet dan kuatnya permintaan otomotif. Sebaliknya, ia tetap berhati-hati terhadap bisnis yang berorientasi pada konsumsi dan logam karena kurangnya visibilitas.

Poin-Poin Penting

• Sektor keuangan memimpin jalan: Bank dan NBFC berada dalam posisi yang menguntungkan karena membaiknya NIM, pertumbuhan kredit yang sehat, dan segmen mikrofinans yang mulai pulih.
• Pertahanan adalah pemenang struktural: Dengan aliran pesanan yang masif dan indigenisasi, sektor pertahanan menawarkan potensi kenaikan sebesar 40-50% dalam 2-3 tahun.
• Diversifikasi Strategis: Investor harus melirik sektor-sektor yang terlindungi seperti layanan kesehatan dan ban, sembari menghindari sektor "sunset" seperti minyak dan saham cat yang valuasinya sudah tinggi.