As the COVID vaccination drive gears up throughout the country and things get back to normal, the hospitality industry will deliver better performance, but the rising cases in some states remain an overhang, says Girish Pai, Head of Research at Nirmal Bang Institutional Equities.

Share Market Live

NSE

Speaking to CNBC-TV18, Pai said, “There is obviously that risk of the second wave which probably has kind of heightened in recent times because of the resurgence of cases in Maharashtra and Kerala. But if you take that out of the picture I think things are kind of stepping down on the COVID situation and if things remain decent, I would probably think that buying into some of these stocks is going to be delivering you decent returns in the next 1-2 years.”

“We would pick Indian Hotels being the leader out there. We are basically banking on the vaccination situation dramatically improving from here and things going back to normal. So this is more a 12-24 month play,” he added.

On midcap and smallcap space Pai said, “I think what is happening now is that the expectation in terms of economic growth has improved especially post Budget. The expectation is that we are going to deliver somewhere in the region on mid-teens kind of nominal GDP growth. In that kind of environment, I suspect that the earnings of the broader universe of stocks are going to pick up in a material way. I would think that there is more value in the mid and small-cap and that is probably the reason why they are kind of outperforming right now.”

He further added, “Across the board we like - in the various sectors, we have the midcap choice so in financials we have certain mid and smallcap banks, NBFCs and insurance companies that we like. In the consumer durable space, there are plays like V-Guard Industries, Crompton Greaves Consumer that we kind of look at, in the consumer discretionary side we have plays like INOX Leisure, Indian Hotels, so potentially there is going to both on multiple expansion and more so an earnings expansion that one should be expecting in the mid and smallcap territory of the market.”

(Disclaimer

: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.)

Watch accompanying video for more.

(Edited by : Ankit Gohel)

First Published:Feb 19, 2021 2:54 PM IST