What is your strategy for LIC?
I do not own LIC shares but for retail investors who are looking for long-term steady returns which will beat fixed income return, I believe the LIC IPO pricing was pretty decent. The market scenario since the IPO closed has been a bit on the negative side. My advice to retail investors would be not to panic and sell even if the price sometimes goes below the IPO price.
The BPCL disinvestment is off the table for now. What would your strategy be for BPCL today?
BPCL was never going to get disinvested. I have been saying this for the last two years. It is impossible for a company where there is so much government intervention in terms of the pricing of products on a daily basis and increase and decrease in taxation on an ad hoc basis to get disinvested.
Look at it from a buyer’s perspective. When he is buying the stock, he does not know what profits they are going to make because the prices are regulated in a supposedly free market for petroleum pricing. Over the next few years, the government via dividends itself should be able to make as much as the stock prices today.
Over the next 10-12 years, they will get that back and so there is no reason for them to do a distress sale. They should keep it open and if they get some serious bid at some stage, they can look to disinvest. For people who have been holding on to the stock and betting on disinvestment, that is not going to happen and beyond that, there is no big story in this. I would say it is more of a dead kind of a stock where one would want to hold but one is not going to make much in it.
What about ? Do you think we are in for some sort of a positive surprise?
Yes there should be some positive surprise based on what they have been doing over the past few quarters where they have been outperforming everyone else on subscriber growth as well as controlling the interest cost on its balance sheet. All these things are positive for them and the Street also has been positive on the prospects of Bharti Airtel.
They need to deliver some decent numbers for the stock to continue to outperform and I expect that result should be in line or better than expectations.
I am wondering what aided that enthusiasm amidst all the auto stocks yesterday? numbers were bad but still the stock saw buying. Everything from to , are springing up?
It is very tough to read into all these movements and they tend to be very random in nature but directionally, many of the auto stocks including the pure play four-wheeler companies on the consumer side like M&M or
are well placed for growth and improvement in profitability this year and next. I still find Ashok Leyland valuations a bit high but then it is the only pure play CV player available.
Two-wheelers would also become interesting nearer to the festival season in three-four months. There is some sort of rotation happening under the expectation that the Fed tightening combined with ECB starting its tightening and all other central banks tightening and also the Chinese slow down will lead to a moderation in commodity prices and as such the user industry’s benefit I also believe in that theme. So auto, capital goods, capital goods companies, etc, user industries which got hurt a lot in the last two years could start to come back.
Are there relatively safer pockets where one can hide in right now?
Now when the Nifty is already down 3000 points from the top. it is not relevant to be looking for safer sectors in my view. We need to wait for the crescendo move in the downside which will play out eventually at some stage over the next few weeks and then possibly get into financials, capital goods, autos.
Many largecap stocks have sold off 20-25% from the top and if they fall 5-7% more, it is 30% down. So, it will be relevant to go and get into these stocks rather than trying to play it defensive after the fall or after the last 5-7% of the fall is left.
There would be a price at which a fintech company will also start looking strong. Have we reached that price on , ?
The price has been reached in Zomato because it is a duopoly. Those companies are doing reasonably well. The news flow around these companies like Zomato or
etc getting into a lot of VC kind of investment rubbed negatively on their stock prices. But yes, I think Zomato has reached that price. My initial target of entry was Rs 60, it is at Rs 55., I do not like these loss making companies where there is no visibility of growth or earnings. so I am very hesitant to buy even now. I am not buying Zomato, but maybe risk takers can take a bet. Nykaa, I would still think we need a bit more lower levels. But I will never touch , PolicyBazaar or CarTrade.
A 25% average correction in already done. Is it time to start thinking contra and buy this downtick?
There are two factors to consider; one is that as the stocks moved in line with the Nasdaq movement, they cannot avoid the fall because they form part of global technology ETFs, indices etc and one cannot argue both ways that earlier the reason for rise was fundamental and now the fall is not fundamental.
Those are the things we need to consider. Nasdaq could still have some more downside and these stocks could still have some more downside. However, companies like
or possibly , the larger cap ones have started coming near the value zone and at some stage. My target for Infosys for entry was around Rs 1,400. We are getting near that and so we should have a look at that stage and definitely look at investing.
By that time, I guess we will be in June and I hope we do not get any warning etc from these companies because a typical feature of the US economy and companies is as soon as some downturn comes, immediately they start cutting discretionary expenditure etc. Whether that has any impact on the kind of revenue guidance these companies have given or not is something we need to see. Otherwise if that does not happen these stocks like you said have started coming into the value zone.