What are the big stock specific ideas for the year 2019?

The big question for stock pickers is whether the year 2019 will belong to the large caps or to the mid caps. While we stay cautious on the small cap space, quality mid caps that have corrected sharply could still be in demand. Based on our sector themes, here are 5 stocks we see as outperformers for 2019.

Hindustan Unilever…

It is really hard to think of a better proxy for the Indian consumer story than HUVR. You can complain about expensive valuations but that is the way it has always been. The dual benefit of rural spending and the dividends of GST implementation should accrue to the company. The big shift towards the organized segment will also add on.

Havells…

Havells is a story largely similar to HUVR but in the consumer durables space. Like HUVR, Havells is also likely to benefit immensely from implementation of GST and the shift to organized sector. Havells will also benefit from a surge in rural and urban demand in tandem with rising income levels and rural thrust. But above all, Havells will now get the full benefit of its expansive reach across India. The recent acquisition of the white goods business of Lloyd, will give Havells a presence across the consumer durables segment that is virtually unmatched. We see Havells as a big beneficiary of the consumer thrust.

State Bank of India

To be fair, this stock has always raised high hopes for investors but failed to deliver in the last few years. Finally, SBI is likely to get its combination of an NPA bottom, credit growth and outlays in technology paying off. The stock is reasonably priced despite its size, reach and asset quality and could be the big beneficiary as the credit cycle turns around. With NCLT bonus of over Rs.1 trillion, SBI finally looks to turn around.

Dewan Housing

The crisis is gone and the result is that the stock is available at single digit valuations. Liquidity is always about perception and that has been addressed and the only challenge now is to leverage on growth segments. This may be slightly contrarian but it is a fleet footed company with high growth that is available at attractive valuations.

Larsen & Toubro

That may seem an unlikely candidate but it is the best bet on a revival in the capital cycle. With oil investments likely to go on stream next year, L&T already has a busy order book. Valuations are a lot more reasonable than what they were 6 years ago. Green shoots are indicating that the capital investments may get a boost. Buy this stock from a long term perspective only. It is not for the short term.