“Given management comments, weak quarterly results, high valuations, etc., most companies are likely to be trading at 50-55 times earnings, with only a 1% to 2% quarter-on-quarter outlook. I don’t think this is going to happen because it’s been around for a long time and management’s comments are also discouraging,” said Rahul Shah of MOFSL.
What are you doing about Dhanteras today, are you buying gold and silver through the Brinkits and Zeptos of the world, or are you going to traditional mom and pop stores?
Rahul Shah: So when you combine both, looking at what the market has been like so far, it definitely makes more sense to shop on the equity side than go on the traditional side. So we feel stocks still have some left and in a similar way to this correction and the sharp correction we’ve seen over the last 15 to 20 days, we don’t just look at the index level, we still feel like there’s good value from here. and provides an approach specific to individual stocks. .
So certain stocks should be this year from 2081, with enough select stocks that continue to do well, and fewer stocks that have gone up or that are just the market doing well, albeit irrationally. I think this is to avoid this. Those stocks did well. If you need to specialize in stocks, would you like to understand which ones to focus on and which sectors they belong to?
Rahul Shah: So let’s look at a couple of things that were relevant this earnings season. One is clearly the market punishing underperforming sectors. So it is clear that in the absence of growth, consumers as a pack are clearly avoided in the short term. If you look at management commentary, weak quarterly results, and high valuations, you’re probably seeing 1-2% quarter-over-quarter growth and most companies are trading at 50-55 times earnings. I don’t think it can continue like this. It has been a long time coming and the comments from management have been discouraging.
FMCG remains an underbought, well-performing and undervalued sector, but one that has not performed well in terms of returns.
If you look at the financials, the numbers are quite decent and large, similar to how most of the PSU banks are doing reasonably well.
If you look at 15% credit growth, in most cases there will be fewer mistakes and more strain on the balance sheet side. Therefore, finances remain the biggest bet in this type of scenario.
So what we like there is a mix of large banks and small banks in terms of private banks and PSUs. So, both HDFC and ICICI have reported good numbers, especially HDFC has not made any tangible returns in the last two years whereas Nifty has been profitable. Now, the risk-reward relationship is very favorable.
Obviously, ICICI Bank stands by it. And thirdly, if you look at some of the PSU baskets, whatever is being reported, for example, if you look at Canara Bank and Union Bank, both of them are very looks interesting. In the last three or four months.
Banking remains the clear winner and there are several areas of real estate that can be identified and rested here. Again, if you look at the whole of India and a few select regions like Bombay real estate, apart from the whole, the numbers are very good. If you look at the Godrej numbers, it was another blockbuster quarter and the guidance was very strong, so the story for the real estate sector is likely to remain strong over the next year or so.
Several stocks will be selected, but as I said earlier, I think at this point it will be focused on specific stocks rather than the market as a whole.
You said you’re actually bullish on the financial sector given the fact that the market is underperforming, but what do you think about the automotive industry? How do you view this particular sector? , and which side are you on, four-wheelers or two-wheelers?
Rahul Shah: So the short-term numbers for auto stocks are a little bit lower than what the public expected and a little bit lower than what we believe we’ve seen over the last two to three years. hey. The number of cars was relatively 2-3 for car companies.
One is obviously that RM costs were low and we were able to make a profit. Second, there was a chip shortage, which had a positive impact on sales.
Well, what has happened is that everything is going well, RM costs have gone up, and if you look at most of those launches, there are no new launches, at least in the four-wheeler space.
So my sense is that the revised valuation looks fine. So perhaps, as I said earlier, we might see a re-emergence of stocks that specialize in stocks that have performed well.
Something like a play like Mahindra & Mahindra, obviously the stock price has corrected, obviously it’s a strong launch in the bookings, so it’s going to do well in the four-wheeler space and it’s going to do well in the two-wheeler space as well. , after the Bajaj Auto numbers, we have seen some selling.
So, again, I think in that space, things like Hero, or the premium segment like Eicher, I think specific stocks will again do well in the auto players, rather than the overall sector, which has done very well over the last six years. . I might be able to take a break from here for a few months.
Do you think a day like yesterday is actually an opportunity to buy Interglobe Aviation? I mean, for all practical purposes, this is the largest market share leader in aviation, and probably the only publicly traded company. This is because it is also a business that is
Rahul Shah: I agree with you. On days like these, if you take a long-term view, perhaps one or two quarters, stocks like Interglobe Aviation offer an opportunity to build a long-term portfolio with significant market share and operating power. I think it will be given. I don’t think there are any competitors that come close to them because they have such a high base and are as good as you’ll see in a public company. Naturally, both in terms of base and in terms of market share.
So my sense is that for a company like InterGlobe Aviation, we probably don’t need to look at more than one quarter. If you have a long-term outlook of 2-3 years, definitely such a decline gives you an opportunity to build towards your long-term outlook.
I want to ask you about the metal counters, how do you see the metals sector, given the Chinese stimulus and the fact that they continue to announce something new every week? Such excitement can also be found in metal counters. But what is your view? Do you think this is a sustainable endeavor for the universe in the long run?
Rahul Shah: If you look at metals as a sector, again, as the market corrected, so did these stocks. However, I feel that Select Pocket will once again have value and be used as a basket for accumulating value. So Steel is still one of the best bets out there, and our favorite is probably JSW Steel in that pack, and the numbers are in line with what we were estimating, The commentary was positive. So JSW is one of the preferred investments, probably like NMDC, a stock in the PSU basket. Again, valuations are very convincing, the recent correction has gone well, and we think steel will continue to do well.
So you’ve got one of those in your pocket. Again, in the aluminum space, Hindalco looks very interesting. The stock has performed very well this year overall and still has room to rise, and I feel that Hindalco will rise reasonably well from here. So from here on, choosing pockets from metal will do the trick.
