What are you pencilling in for ?
The overall results this time should be decent given the fact that petrochemical margins should be good. But a large part of the value of the company lies in under retail business as well as the Jio platforms. Jio platforms did a huge fundraising a year back but no one really knows what is happening Jio platform etc. and Jio the telecom operations. The stock basket has not really picked up and so there is no case for any significant upside in Reliance based solely on the fact that the legacy business is cyclically doing better. Unless and until we see some clarity on what is happening on the other growth businesses which got huge inflows from investors last year, I do not think the stock has much upside left in it.
What is the outlook on auto ancillary companies like Balakrishna Industries, Amara Raja and some of the tyre companies?
Many of these companies’ results will be pretty good but we will see a margin squeeze in the tyre companies as the raw material price has shot up. Other companies should hold up reasonably well but then the outlook has become a bit hazy because OEM demand will moderate and the input costs have gone up quite substantially for most of these companies. That will impact their profitability going forward.
In the absolute near term, although Exide is cheap at the current prices and even Apollo Tyres stocks are cheap on a pure valuation basis, the near term outlook does not seem as great. For someone with a slightly longer term horizon, Exide and Apollo Tyres prices are not bad. But can you wait it out for a month, month and a half? I do not think the stocks would go up substantially and if there is a further dip, then those could be better prices.
