4 new-age tech stocks that can be bought in this correction: Dipan Mehta
Synopsis
“One should have some of these new-age digital companies in the portfolio. They are the future. They are going to be multibaggers going ahead. It is just that we do not know at this point of time which will be the winners. It could be Nykaa. It could be Paytm or Policybazaar, it is difficult to say because these companies are constantly evolving. ”
The listing pop was more to do with the kind of fancy which was there in these businesses at that point of time and now the scenario certainly has undergone a change with Nasdaq correcting the way it has and with interest rates going up, the discounted cash flow methodology does suggest that these stocks should trend lower.
But the way I approach them is that one should have some of these new-age digital companies in the portfolio. They are the future. They are going to be multibaggers going ahead. It is just that we do not know at this point of time which will be the winners. It could be Nykaa. It could be Paytm or Policybazaar, it is difficult to say because these companies are constantly evolving. There is no doubt that they have a great opportunity to grow the business and if they manage the implementation and their business plans well, then they could go up manifold from these levels. It is just that we do not know the route and at which point of time they will start to make profits.
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Then there are these CPaaS companies like Route Mobile and Tanla. All these stocks have corrected and it is a good time to allocate some of your portfolio to these stocks during this correction.
What is your take on the pharma counters going forward?
Pharma is getting very complicated. It is not a straight line. Gone are the days of secular growth earnings and they had a good patch just around the pandemic when there was frantic buying of formulations in the US market. There was a slight pause as well and we saw good numbers coming through from these companies.
Stocks Recommendations
Our preference is to play through the real estate companies and through the engineering construction companies. The usual disclosure – our top pick still remains Larsen & Toubro and the kind of order flows which are coming through to the company is giving it some amount of pricing power as well. This is going to be a great stock in the next two-three years or so, given the earnings visibility and significant value that has got created in the subsidiary businesses as well.
They are still looking and trying to optimise their capital by divesting some of the infrastructure projects where they themselves are the operators and owners and if they are successful over there, that will make the balance sheet even lighter and one could see the return ratios going up. Therefore earnings multiples also can move up. It is very positive on that company as well as some of the other EPC players like say NCC or maybe Dilip Buildcon. These companies are sitting on multi-year order book positions and with the kind of infrastructure spending which is envisaged in the Budget, there should be no dearth of new contracts for them.