Just wanted to get your sense on this because of late Laurus Labs as a company, as a stock that has been doing decently okay in terms of recovery in their margins as well and along with that the stock price performance. But do you believe that this news flow can impact the stock and the company in any way?
Hemang Jani: Yes, so some of the API companies have started doing well and Laurus in particular after subdued performance for more than one-and-a-half, two years, now it looks like the earnings growth could look much better with slew of launches. Even the API business per se is looking much better in terms of price and volume both.
Only issue here is that if we have the news on the tariff on the pharma companies, then you may see a bit of a knee-jerk reaction like what we have seen in the past couple of days, but I do not think there is going to be any materially negative impact on the pharma companies per se.
So, our preferred picks would be apart from Laurus Labs, I think Divi’s is something that is looking quite interesting, even its business model, contract manufacturing side and the expansion which they have completed, but the large generic plays we are not too sure, something like Sun, Lupin we are avoiding at this point of time for want of further clarity on the tariffs.
Do you sense that autos could finally tread back and maybe now catch up with the rest of the rate sensitives?
Hemang Jani: Yes, I do think auto selectively should do better. On the rural side what we are hearing is that the traction should be much better and particularly when you enter into festive season you will see the kind of growth that one can really look at in the current scenario. So, we do like auto, but given the high base, it may not be across the board kind.So, Mahindra & Mahindra is something that we have been liking for their overall growth trajectory of 20-21%. Bajaj has corrected quite a lot and is trying to stabilise around these levels. The monthly numbers continue to be reasonably good with EV being at the higher growth trajectory for them. Export side they are going reasonably okay. So, some of the two-wheeler companies like Bajaj, maybe TVS, and Mahindra & Mahindra these are the names that we like.
What will your view be on this metal counter, Vedanta?
Hemang Jani: So, I was saying that metal as a pack is very well placed given the trend in the base metal prices and listen names like Vedanta across majority of their products, be it the oil and gas, the aluminium, copper, zinc, even silver which is doing so well.
So, they stand to benefit quite a lot. I am extremely positive on Vedanta, Hindalco which has consistently been doing well, so positive view on the metal companies at this point of time.
Give us your sense on Vodafone Idea because yes, it has been one of those key underperformers, we are aware of the reasons, but one of its peers that Bharti Airtel of late a lot of these experts have been liking this stock. So, what is your sense on the telecom space and would you still prefer buying Bharti Airtel versus Vodafone Idea?
Hemang Jani: Yes, absolutely. Overall, if you see, Bharti has been one of the best performing stocks, pure play digital and even if you compare their performance versus Jio, most of the parameters be it the ARPU growth, overall EBITA margins, overall growth in the profitability it has done much better, so no two ways about it, Bharti by far is the best play on the telecom.
But I really want to play Idea at this point. See, people like a low price stock, particularly the retail investors, but last five years if you see hardly anybody has made money, creates a lot of excitement when you have some on the AGR, fundraise, or all kinds of things, but by and large it becomes a trap, even if you have a small uptake, so not tempted, I think things are not looking to clear on their balance sheet front or how the company is going to survive and more importantly whether they will have any strategy to stop the market share loss which they are seeing for the past many years, not comfortable buying into an Idea.
What do you make of Jio Financials and this after the news that they have acquired that 7.9 crore equity of Jio Payment Bank from SBI?
Hemang Jani: So, a lot of promise, lot of interesting developments happening on that front, but when I look at the market cap and the valuations, fact that this entire space is not going to be easy to navigate given the fact that on the financial services side you have very big companies to compete with.
So, I am not somebody who wants to buy a company because it has a great promoter or pedigree. We should give more importance to the earnings trajectory even from a one- or two-year perspective. So, I am staying away from Jio Finance at this point.
By
