How are you going to approach the telecom sector? All three stocks — Bharti Aitel, VI as well as Reliance have underperformed in the last month or so.
This is despite the fact that the telecom companies had such a strong subscriber addition and the way Bharti gained market share both on the overall subscriber base as well as in terms of the quality of the subscribers with 4G additions which is almost at about 5.5 million. This is because of two reasons; one is the kind of money that they are going to be investing into spectrum and so there will be that kind of pressure on the balance sheet, at least for Bharti.
I do not think that for Reliance, we need to worry about the spectrum and the balance sheet side but for Bharti and Vodafone, this could be an important factor that the market is worried about. Secondly, nobody is able to put a finger on exactly when a tariff hike will happen though there are talks of indirect hike in tariff through some other means. But the market is definitely a little worried about this price hike not being there.
In the meantime, the underperformance presents a good opportunity for players like Bharti and Reliance and we continue to have a positive view on them though they might underperform in the short term.But from a one- or two-year perspective, they both present a great opportunity for investors.
How are you viewing the Tata Group companies? Where will you place your bets?
Hemang Jani: We have seen a rerating and market cap growth across all Tata companies — be it commodity-based companies like Tata Chemicals, Tata Steel and a whole host of midcap companies in the IT side or the consumption side of the Tata Group. whether it is Tata Consumer and the entire retail kind of chain that they have.
Chairman N Chandra is looking to streamline the structure and they are trying to make the cross-holding part far more focussed and leaner. In such a scenario, the market would definitely look at this development positively.
We have a positive view on Tata Motors. It has underperformed in the last one month. We also have a positive bias on companies like Tata Consumer and TCS.
What is the best way to bet on the entire EV space?
It is a bit early but some of the companies that could really be interesting include Tata Chemicals where they are trying to set up battery manufacturing capacity. Other than that, Tata Power because they also have some plans to come up with a network to help the vehicles do the charging.
Other than that, companies like Motherson Sumi, Endurance Technologies because when we are talking about electric vehicles (EVs), the entire ecosystem around the ancillary part becomes important. So, Endurance and Motherson Sumi could be interesting companies from that EV angle.
