Sandip Sabharwal: Mantra should be that you should never have gone away.
But those who have missed the bus, what should they do now? I mean, I am just getting a sense there is a very strong left out feeling. I am looking at the open interest, the total open interest at the beginning of the series is actually slightly lower than what the May series beginning numbers were, which means the market mood has changed, prices have changed but participation is not there.
Sandip Sabharwal: Yes, because people have been taken by surprise ever since the rally started early April, because most of the commentary was very negative. People were expecting markets to crash. And in fact, if you look at the result delivery of the March quarter also, as per what I read today as a gross of all the companies which have reported, the earnings growth on a gross basis for all the companies who have reported till now is around 12.7% growth in profits whereas the expectation was hardly 6% to 8% for this quarter.
So, the earnings growth deliver also has been good and in the current year the profit growth outlook could be, I would think, at least 12-13%. So, things are reasonably well placed. It is a buy on dips market and as the result season winds down, people will have the opportunity to look at what the results have been, how the outlook is and then take a view on where they should be investing.
On a pure macroeconomic basis, India is pretty well placed. The total imports of these rare earth magnets would be just around 300-350 crores, but they could bring the entire, at least the EV part of the industry and to a great extent the traditional part also to a standstill over the next two months if this issue is not resolved. So, I think that is the key factor we will be watching out for. Ex of that I would be positively inclined on the Bajaj Auto.
If the stock falls today, you will be a buyer, I mean let me put it this way?
Sandip Sabharwal: Like, I said this rare earth magnet issue is an issue which we need to be cognisant of because most of the analysts are not talking of it, but then because it is a India-China issue, so if it does not get resolved on time, we could see production getting stalled right at the start of the festival season, so that is the near-term risk. So, the stocks will give time for people to accumulate, so you do not need to jump in and buy the entire quantity today. So, let us say hypothetically if it falls 3-4% today, a small amount of buying is possible and then accumulate it over the next few weeks.
On the other hand, Ola, what do you say about those numbers?
Sandip Sabharwal: The least said the better.
Yes, I mean quite a shocker when it comes to both the stock price journey, there has been no financial improvement, they are only deteriorating when it comes to their operational performance despite the volume uptake which comes in, I guess, because of the steep discount. There has been losses which have been the spot of bother for just about everyone and they are again setting ambitious targets for themselves.
Sandip Sabharwal: I think you can make lot of statements to excite the analysts which include backward integration, comparing yourself to companies like Tesla, etc. But then, the fact of the matter what we need to realise is once a brand loses reputation in the face of the consumers, then irrespective of what you are doing internally to do backward integration, to get into cell manufacturing, to improve your profitability, getting market share and volumes back especially when the other players are also aggressively working towards new product development and taking market share will become very-very tough and that is a reality which investors into this stock need to realise. So, it is always possible that with aggressive management guidance we could see small time bounce backs in the stock, but what will change the consumer perception to create a uptick in the volumes is the question mark and that is something which we need to see.
Let us discuss this curious case once again. We were chatting about this last afternoon and we continue talking about it as to how there could be more and more skeletons in the cupboard.
Sandip Sabharwal: So, historically, we have seen in financials once new managements come in, the board of directors or the audit committee, etc, takes a fresh look or the RBI conducts a fresh review. Typically, it does not end at the first level of disclosures. So, that is the risk I see in IndusInd Bank. Especially in financials I always advise that people should not be bold here. So, I would remain cautious and the outlook for many other larger banks is much more clearer and if people need to be aggressive, then there are other sectors where they can be aggressive not financial.
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