What are you telling your clients?
Overall, the market seems volatile. We have almost 60-65% in cash and I feel that the market is a little heavy on the higher side and there is very little headroom across the sectors and stocks. The growth-oriented stocks might have some good upside and the downside risk could be limited. One can have positions in stocks like and . But overall, in any of the sectors, I do not feel we can have a better price correction before the end of March and that is why we remain light in trading position as well as investment.
Where within the infrastructure space are you sensing opportunity?
The infrastructure sector has a long way to go from here because new awards have been given in terms of highways, roads and even in dams and capital goods segments as well. Overall, we can look at this sector over the next two to three years. L&T is an execution capable company though it is not performing well because of this pandemic setback. My preferences will remain with L&T and one can consider L&T as a conservative investor.
In the midcap front, there is Dilip BuildCon. But from Rs 450 odd, it has now gone to Rs 680. The prices are not comfortable but overall, the infrastructure sector remains a very strong contender over the next two to three years in terms of growth. But it would be difficult to comment on any names right now.
The overall spectrum auction has concluded. What is the view on the telecom space?
Almost half of the spectrum has been sold to Jio because they have got a strong balance sheet and because of the way they have garnered money from foreign investors. It would be a very strong footing for them in terms of being the largest player. The only thing is they need to retain their customer base. There is not any further tariff war further between the top three service providers. I would say that Bharti needs to pull up its socks really hard right now and work upon their own circles and retain the customers and that would be better for them.
I am of the opinion that this circle needs to be built and would be good for them but Jio on equity value is fairly priced right now so that will have some kind of a pause here. But post the consolidation, it will be good for them over the next one and a half to two years down the line.
Bharti has gone for the right strategy by bidding a few of the circles and investing in the spectrum. In terms of competitiveness, they are very much capable of taking competition from the top candidate Reliance Jio. Bharti has some more potential in terms of balance sheet redesigning and probably that would be good enough for them. So overall, spectrum bidding is very much in line with their balance sheet quality and business growth opportunity.
