Let’s talk about the telecom space and everything we are seeing happening with Vodafone on one hand, while on the other hand, Bharti Airtel was at a life-time high yesterday. What are you making of the telecom space especially after the minister’s comments that they prefer that the Indian telecom market is not a duopoly?
Sudip Bandyopadhyay: The statement is definitely a welcome development from a Vodafone perspective. But we have seen too many flip-flops and too many things changing as far as Vodafone and this entire AGR due related issue. Of course, conceptually we should not have a duopoly and we should have more players and competition, but the reality is Vodafone has been suffering for a very long time. And beyond all these dues, operationally also Vodafone has not been performing well. They are still losing customers on a monthly basis and that definitely points to operational weakness.
Yes, the rate of loss of customers on a monthly basis has come down, but the fact remains that they are still losing customers and that definitely is not a good sign. Of course, the balance sheet needs major amendment, because even at the end of this year, unless something is done, their AGR dues is about Rs 16,000 crore and there is no way Vodafone can pay this amount through internal accruals. So, they need either a waiver or a postponement by the government or some kind of major fund infusion because bank loans are very difficult for them to get.
Under these circumstances, Vodafone still remains a speculative stock and if one has to play the telecom space, they should look at Bharti Airtel or Bharti Hexacom. Both are doing well and are definitely good buys. Even if we look at the last price hike which the telecom companies took, the biggest beneficiary has been Bharti Airtel. The flow into the P&L has been best for Bharti. One more hike is expected during the current fiscal and that should benefit Bharti Airtel disproportionately. Under these circumstances that is one stock one should look at.
We have seen a lot of new regulations coming into play with respect to the life insurance companies and insurance as a whole. They are also undertaking a big campaign when it comes to the life insurance side of the business. What do you make of the insurance pack? How do you see things moving from here because everyone is talking about the big opportunity in growth for these insurance players? But a lot really has to come into the numbers as well.
Sudip Bandyopadhyay: Insurance is humongous and we are just scratching the surface. But the reality is, as you rightly said, these have not flown into the numbers of the listed companies at least and under these circumstances, one has to take a slightly long-term view if you are investing in insurance companies. Life insurance is a sector which has got significant potential and amongst the listed companies, LIC merits attention for multiple factors. While the performance has not been anything great in the recent past compared to private peers, the fact remains that the potential is huge and things have started improving at LIC’s level and valuation-wise it still definitely seems attractive compared with private peers.
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So, LIC from a long-term perspective can be definitely looked at. One can look at SBI Life as well and it also offers value for money opportunity at this stage considering the strength in bancassurance and the strength of channel business as far as this insurance is concerned.
