Global brokerage firm Bernstein has announced a significant reshuffle of its India model portfolio, strategically adding three new stocks while removing one, in a move aimed at capitalising on specific market catalysts amidst modest overall returns.
Key Additions to Bernstein's India Portfolio
- Adani Ports and Special Economic Zone Ltd (Adani Ports): Reintroduced to the portfolio after a recent market correction. Bernstein cited an improving global economic environment, a robust balance sheet, strong pricing power, and expanding international operations as key drivers for its re-inclusion.
- One 97 Communications Ltd (Paytm): Added as a momentum play. This inclusion anticipates the potential finalisation of merchant discount rate regulations, which could significantly impact the digital payments giant.
- Eternal Ltd: Included based on strong EBITDA and net order value growth, positive management commentary, and its dominant position in the quick-commerce sector. Bernstein believes competitive concerns for Eternal are easing, with its food-delivery business also demonstrating steady growth.
Removal from the Portfolio
Avenue Supermarts Ltd (DMart): The retail chain, promoted by Radhakishan Damani, was removed from Bernstein's list. The brokerage noted DMart's prior outperformance but expressed a lack of clear near-term direction for the stock. Risks flagged include weak agricultural sowing, elevated wholesale inflation, and the ongoing competitive threat from quick commerce platforms.
Overall Market Outlook and Strategy
Bernstein analysts, led by Venugopal Garre, maintained a neutral Nifty target of 26,000. The firm is adjusting its portfolio to favour stocks with visible catalysts, acknowledging that while the overall market setup may not be compelling, interesting opportunities exist beneath the surface. Other notable holdings in Bernstein's portfolio include Larsen & Toubro Ltd (L&T), Titan Company, Axis Bank Ltd, HDFC Bank Ltd, Mahindra & Mahindra Ltd (M&M), and Zydus Life.
"Even with a not-so-compelling overall set-up, the market remains quite interesting beneath the surface," analysts at Bernstein wrote in their note.
This strategic recalibration reflects Bernstein's focus on identifying stock-specific opportunities to achieve outperformance in the current market environment.