Where within the auto space do you believe companies can capitalise on the overall EV momentum?
If you want to play automobiles on the EV investment theme, then the best pick has to be Tata Motors because of the JLR connection. They are the best equipped in terms of technology and know-how to launch electric vehicles. Also other Tata Group companies are pitching in trying to set up their entire electric vehicle environment and ecosystem or charging as well as batteries. Amongst all the auto companies, two-wheelers as well as four-wheelers, Tata Motors may be first off the blocks in terms of EV strategy. Anyway, they have the best selling model in the EV space and that is one stock to look at on a medium to long term basis If you really believe that the EV story will pick up and gain more traction .
From an economic standpoint, once normalcy returns, we are still quite positive on Maruti as well as Eicher Motors. We like Maruti because demand for personal transportation will continue to remain very strong and a lot of entry level models are there with Maruti which benefit them because a lot of first-time buyers will look at getting into Maruti rather than some of the other premium models.
What we like about Eicher Motors is the fact that a premiumisation trend has gathered momentum and Eicher Motors has a very exciting range of new models and they have also expanded their distribution network significantly. The benefits of both these factors will accrue over the next two-three years or so. So within the auto space, as far as EV strategy is concerned it is Tata Motors. Other than that, it is best to stay with market leader Maruti and Eicher Motors when it comes to Royal Enfield and the premium motorcycle segment.
Where should one look in Covid-related themes? What about oxygen companies?
If you want to play it safe and look for opportunities or investing themes around Covid, there are many stocks in the pharma sector where pharmaceutical companies are clearly benefiting from higher volume of their products or the vaccination opportunity and one could play those opportunities or those investment themes. For example, Dr Reddy’s benefits from the sale of Remdisivir as well as the vaccination opportunity in tie-up with the RDIL, the Russian agency. Similarly, Glenmark also has got some products which benefit from higher volumes because of the pandemic and Aurobindo could be a dark horse, given that it has got a good vaccination strategy in place.
So within pharma, there are adequate stocks to play this particular pandemic theme and I am not that keen on buying oxygen companies because one quarter may be fabulous because of increased demand.
