Power Sector Emerges as a Strong Bet
While energy stocks have been witnessing sharp swings due to fluctuating crude oil prices and geopolitical tensions, Shah believes investors should focus more on the power segment rather than the broader energy basket.
“So, I do not have a lot of positive view on the energy basket. It is really very volatile. So, I would tend to look at the power sector. The power sector will continue to do extremely well,” he said.
Among his preferred picks, Shah highlighted Indian Energy Exchange, commonly known as IEX. Despite concerns around market coupling, he believes the company remains structurally strong.
“IEX is one of my top picks. Even though it is entangled in the market coupling scenario, even if the market coupling comes in, IEX will continue to do extremely well.”He also pointed to companies such as TD Power Systems and Genus Power Infrastructures as strong performers within the broader power ecosystem. According to Shah, capital goods and power remain among the most promising themes in the current market setup.Banking, Chemicals and IT Offer Long-Term OpportunityAddressing concerns around geopolitical uncertainty and fresh capital deployment, Shah reminded investors that equities inherently carry risk, but added that valuations in several sectors have become more attractive after the recent correction. “So, equity is never a safe bet. Equity has risk that is why it has got returns.”He believes the microfinance space could perform well over the next one to two years, provided global tensions ease and markets regain stability.
“If you look at the banking and the financial services, there I think the microfinance sector will continue to do extremely well over the period of next one or two years provided this war gets solved.”
Shah also maintained his positive stance on private sector banks, calling them reliable options for stable returns. Beyond financials, he sees value emerging in the chemical sector after a prolonged correction.
“Chemical sector has taken a lot of beating. A lot of stocks are now available at 20-25 times multiple, that also you can look at.”
The IT sector, according to him, remains an important contrarian opportunity despite concerns around artificial intelligence disrupting traditional business models.
“Some of the largecap IT stocks continue to trade at about 15-16 times multiple with a good dividend yield of about 3% to 4%.”
He acknowledged that AI could pose challenges for IT companies in the future, but said valuations are now turning increasingly compelling for long-term investors.
Realty Continues to Remain in FavourOn the real estate sector, Shah expressed confidence despite recent volatility in property stocks. He believes premium developers and real estate ancillary businesses are well-positioned to benefit from sustained demand.
“So yes, the real estate sector, we are positive on the entire sector.”
He specifically mentioned Godrej Properties, citing its expansion plans in Mumbai and Bengaluru as key growth drivers.
“Godrej Properties, its expansion in Bombay as well as Bangalore they will continue to do exceptionally well.”
Shah also noted that some developers are exploring opportunities in data centres, which could open up an additional growth avenue for the sector in the coming years.
EMS Sector Faces Valuation ConcernsThe electronic manufacturing services (EMS) segment, once among the market’s hottest themes, has seen significant pressure after disappointing earnings from several companies. Shah believes excessive valuations are now correcting.
“So, specifically, some stocks which were really very highly valued have got beaten down very badly.” Referring to Kaynes Technology India, he pointed out concerns around missed revenue and cash flow guidance.
“They have missed the cash flow guidance. They have missed the revenue guidance as well and they are now being cautious.”
According to Shah, while revenue misses can sometimes be overlooked, weak cash flow execution is a much bigger concern.
“Missing the revenue can be understood, but missing the cash flow is a really big blunder from the management.”
He cautioned investors against chasing EMS companies trading at extremely rich valuations of 60 to 80 times earnings. However, he added that the sector could once again become attractive if valuations correct further over time.
Quick Commerce Battle IntensifiesThe conversation also turned to the rapidly evolving quick commerce industry, especially with Zepto preparing to enter the listed space alongside existing players like Blinkit and Swiggy.
Shah said the sector remains highly competitive, where disciplined execution and controlled cash burn will determine long-term winners.
“Those players who are intensely disciplined are going to survive, are going to make hay when profitability comes in.”
He praised Eternal for Blinkit’s operational discipline, particularly in dark store expansion and managing profitability.
“Zomato on the other hand has 60% to 70% of its revenue now coming in from Blinkit and is extremely disciplined about how to open dark stores and how to expand.”
At the same time, he described Zepto as highly aggressive in customer acquisition and discounting strategies, which could intensify competition across the sector. “Zepto on the other hand is really very aggressive with respect to discounting.”
Shah believes the player capable of balancing growth with profitability will eventually dominate the market.
“Right now I feel it will be Blinkit. Blinkit is doing exceptionally well.”
He also advised investors to keep an eye on Swiggy from a valuation perspective, even though profitability challenges persist.
As markets continue to react to global developments, Shah’s outlook reflects a cautious but selective optimism — favouring sectors with structural demand, reasonable valuations and disciplined management execution.
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