IREDA, IRCON, L&T, Aurionpro Solutions: Dharmesh Kant shares stock picks; prefers bottom-up approach

Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, on Tuesday said the market offers selective opportunities for "cherry picking" across segments, but investors should adopt a bottom-up approach rather than a top-down strategy.

In an interaction with Business Today, Kant said Larsen & Toubro Ltd (L&T) remains a preferred pick. "There were news flows suggesting that L&T may lose business in the Middle East, but nothing of that sort is happening. Being a large conglomerate, the company continues to march ahead with strong order inflows. Its entry into the defence space, including fifth-generation aircraft manufacturing, will further strengthen its overall portfolio," he said.

He added that L&T is sitting on a sizeable order book, with a healthy run rate of order inflows and stable operating margins.

Turning to the railways segment, Kant said the sector has been neglected over the past couple of years but is now seeing renewed momentum. "Two years have been lost in the railway space, but things are picking up. There have been aggressive announcements of new projects and awards. This is a space investors should look at," he said.

Among railway stocks, he recommended Ircon International Ltd. "Ircon is more of an infrastructure play. Valuation-wise, it is the cheapest among the railway basket. One should consider looking at it," Kant added.

On the renewable energy financing space, Kant mentioned that the Indian Renewable Energy Development Agency Ltd (IREDA) stands to benefit. "The numbers over the past few quarters have been quite good, and the stock has corrected sharply. It offers an attractive valuation at around Rs 120–125 levels. From a one-year investment horizon, we are looking at a target of Rs 160–170," he stated.

On the information technology (IT) sector, Kant said he remains largely cautious. "We are avoiding the IT sector, except for one stock -- Aurionpro Solutions Ltd. Otherwise, we are out of the IT basket completely," he said.