Havells, TTK Prestige, Bata India may gain from salary hikes: Gaurav Mehta

In a chat with ET Now, Gaurav Mehta, VP-Institutional Equities, Ambit Capital, shares his views on the pockets that are likely to be benefitted by pay hikes post the implementation of Seventh Pay Commission.

ET Now: The big news last week was the pay commission recommendations and we did saw a bunch of likely key beneficiaries logging smart gains. But to your mind, which stocks would stand to benefit as a result of that 23-24 per cent pay hike?

Gaurav Mehta: If we compare, the recommendation of 23-24 per cent pay hike this time is lower than the 35 per cent hike implement in the Sixth Pay Commission. Moreover, last time we had 30 months of arrears that were in fact paid in a lump sum manner. This time we will just have four months of arrears. To that extent, we do not think that this in itself will be a very significant boost to consumption in a very major way, especially for the large ticket consumption in terms like passenger vehicles, two wheelers and jewellery makers.

We do not think these sectors will be as significantly impacted because of that. However, low ticket consumption plays such as makers of kitchen appliances, light electricals, footwear and apparel are categories where you should see benefit because of this. In that context something like Havells or TTK Prestige or Bata, for that matter, are the thousand to five thousand rupees per year of annual expenditure categories that are looking attractive.