Pharma would continue to report good double toe raise move forward with continuous boundaries, says Siddhartha Khemka, Head of Retail Research, MOFSL Auto has been a well detected narrative. Where do you receive fresh buying opportunities? A area gyration is happening and in the last couple of parts, it is happening at a pretty fast pace. Auto did well for some time and then we heard a correction. The monthly crowds have been mostly okay and have been in line with expectations and some are below apprehensions. But the overall promise is that with the brand-new time starting things will improve for auto. Some of the companies have been talking about February being much better and at analysts’ fulfills and conduct interactions, there have been talks of improving profit. A case in point is Tata Motors, which was the major gainer out of the auto bundle, yesterday. We had the managing for the investor’s day for JLR over the weekend and they seem to be focussed on improving profitability, increasing pay and well geared for the future with a open of a lot of EVs in the world markets. Apart from that, some of the vehicle ancillaries have been doing well in anticipation of impetus from the EV space and talks of PLI scheme for the automobile sphere. Within the OEMs, we like Maruti which is doing good in the passenger vehicle space. M& M is our opted select to play the rural area and among the two-wheelers, we like Hero Moto. This is the preferred basket within the OEMs; within the auto ancillaries we like Motherson. We believe they are the best suited to benefit out of the entire global change from the traditional cars to EVs. What is your outlook on privatisation of PSU banks? Do you like this theme? Yes. It seems the government is pretty determined to go through with privatisation of PSUs. A mas of steps are being taken despite the interruptions and propagations for umpteen goes for Air India privatisation. BPCL disinvestment was supposed to happen last year but went increased. But now the government has started its intentions very clear and are taking steps in the right direction. They are taking those steps — be it in Concor or in Shipping Corporation. Now BPCL is selling off its stake in Numaligarh refinery as that percentage needed to stay within the public space. This paves course for BPCL to be privatised and this would be one of the biggest privatisations. We emphatically like this theme. Historically, a great deal of these PSU fellowships are not that efficient. They have not been at the forefront of growth. The only thing that they volunteer is significance in terms of trading at a much-much discount to some of the other peers. With the private players coming in and turning around the business in terms of efficiency, profitability further improve and hence these evaluations. We have been positive on the OMCs for some time now. BPCL continues to do well and we believe that with the Numaligarh refinery transaction at a much better valuation than earlier expected, the overall mark for these other refining occupations is elevated and hence that is a big positive step for BPCL. How have you looked at the numbers from the pharma room? Will we see strong domestic as well as international growth across the board? Pharma has been reporting strong numbers for the last three consecutive fourths and pole pandemic, things have improved for the companies not only on the domestic front but including information on the international figurehead with the US FDA becoming much more lenient in committing acceptance for weeds and commodities. We have recognized a strong product pipeline for a lot of these companies which are not related to Covid, but rather lifestyle ailments for which we will have heavy demand going forward. A bigger challenge for the pharma opening was the pressure on cost realisation which has naturalness off a lot post the pandemic. A batch of raw material outlays have come down leading to improvement in perimeters. We speculate pharma would continue to report good doubled toe emergence move forward with the continuous margins and that should lead to good returns from the cavity. Are there any inventories in the new economy gig gambling gap that you are able to advocate? Does it interest you? Yes, this is a space which is a niche play and it is doing very well. This is a digital theme although different companionships are in separate segments. Some of the companies within this space that we like are IndiaMart which is in the B2B space, which is where JustDial has just penetrated. We are seeing how these evaluations had run up for IndiaMart because of the scarcity premium that it was getting and which is now getting distributed with a second player like JustDial getting in. While we continue to like IndiaMart, we have lowered the rating to neutral given the high valuation. On digital, we have recently kick-started coverage on a brand-new furnish — SBI Cards. This is mainly a play on the increasing digitisation in terms of deals which have accelerated post the pandemic. SBI Cards is the second largest player in the Indian card space and it has the benefit of the parentage of SBI and uttered its access to the client base of SBI, has seen steady emergence in the past. The fiscals are pretty strong and the valuations are pretty pleasant. That is a stock within the new age digital theme that we like. How are you looking at the Tata Group companies like Trent, Tata Consumer? Some of these honours in the consumer basket have done well. Tata as a group has interpreted a huge mutate berth N Chandra coming in as the chairman. The part group of companionships have refocused towards return fractions and efficient use of capital is the main mantra rather than the earlier scheme of the expansion of and becoming a global leader. So that has helped a lot of these companies. We have ascertained the change in leadership management and consolidation of the consumer business from Tata Chemicals into Tata Consumer as well as closing of some of the loss-making organizations globally. From here on, the tale for Tata Consumer is about the process of improving margins which will lead to higher growth in net profit. On the top position, the focus is going to be integration, economies of flake and cross selling between the two segments. The third new segment that they are launching is Tata Sampann which is also doing well. On the operating leveraging, improvement in EBIT margins because of the its effectiveness and scale will lead to higher growth. Similarly, Trent is in a kind of unlock trade. With the lockdown, all these plazas and showrooms were shut and retail stores were closed. With the reopening, we have seen pent-up demand and a lot of these companies are moving towards e-retailing which are likely to be the growing driver in future. Tata Consumer will be a consistent compounder. We still have a buy rating on Tata Consumer. Trent is a long term play given the very high valuation that it authorities. Over the last few years, we have seen that the premium valuation exactly continues and they have given consistent 20% plus expansion. They is expected to continue to do that in future as well. How are you looking at some of the most recent listings? If you look at some of the most recent schedules and also include some of the IPOs in the last one year, a lot of these companies are niche companionships within their space and some of them were first of its kind and that allured a lot of interest. Another large-hearted factor is that some of these IPOs are in the midcap space within that Rs 1,000 -2, 000 -3, 000 crore market cover with an IPO size of about Rs 400 -7 00 crore. It is a normal sweetened blot where you have a huge market liquidity driven rally and there is a lot of desire for some of these newer, niche companies and the first-of-its-kind listing business. We have looked a lot of demand for such IPOs. The other factor is that these IPOs were coming out with nice valuations and hence the demand was pretty strong, a case in point the recent listing in the railway segment. Even in the past we have seen some of the better managed railway companies like IRCTC, which is a kind of a monopoly within the rail ticketing platform, has insured a huge interest even on the IPO post listing and it continues to do well. RailTel is another company which is a play on stipulate broadband assistances through the railway network and that has done well although we do not have a view on that. The MTAR Technologies IPO which knocks off today is a play on not only defence but civil nuclear energy and we ensure the numbers being pretty continuous. It is a private fellowship but a play on defence and we believe it could see continuous proliferation going forward. The valuations are not that expensive and could see some index increases. One can look at this IPO from a long-term perspective as well.
Read more: economictimes.indiatimes.com
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