Post-budget, domestic brokerage Kotak Institutional Equities (KIE) has initiated a portfolio rejig. Citing proposed changes in the taxation of life insurance companies and expensive valuation, a concerned KIE removed and Card from its model portfolio.
“We like the long-term prospects of both companies. However, the proposed change in the taxation for certain products of life insurance companies and possible more negative changes in the future temper our enthusiasm for the life insurance sector. A combination of potential regulatory risks, slowdown in discretionary spending and expensive valuations in the case of SBI Card has challenged the investment thesis,” said Kotak Institutional Equities.
The brokerage also removed
from its model portfolio. However, it has several other names in the large-cap and mid-cap portfolios to play on the multi-year investment cycle theme. The brokerage has a ‘buy’ rating on from the real estate sector with a target price of Rs 560.
On the other hand, Kotak has included Uno Minda to its portfolio after stating that its valuations have become more palatable, with the stock price stagnating at the current levels for the past few months. The stock is down 11% over the past 12 months.
In its revised large-cap model portfolio, the brokerage firm included (150 bps) and increased the weight on (80 bps). “ABB used to be in our mid-cap portfolio until six months back and the stock has largely stagnated around the same level over this period, leading to meaningful derating in multiples,” the brokerage said.
“The case for Bharti simply reflects potential gains from further consolidation in the Indian telecom market; the position of Vodafone-Idea is becoming more untenable by the day,” it added.
On a year-to-date (YTD) basis, HDFC Life’s stock has plunged over 15%. Meanwhile, shares of SBI Card have declined over 7% YTD.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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