How are you looking at the entire telecom basket? Bharti Airtel continues to remain the favourite?
I think Bharti has been one of the few stocks which have been an enigma. It probably has the highest buy and accumulate calls. I think the Indian mobility business continues to do well. It (Airtel) has the highest share in terms of new customer additions in 4G. Their Africa business has stabilised. The home mobility and home segment businesses seem to be doing very-very well. I think the key trigger for a substantial rerating obviously has to be tariff hike. That is something you need to cover up for both debt as well as the overall (AGR) dues.
It is a great play on how the digital infrastructure and technology is going to play out and it gives you a valuation comfort as well. So Bharti Airtel would be there. Reliance is a more of a platform play. I would not look at Vodafone Idea till the time they have a fundraise and a credible technology partner with deep pockets.
Is Shyam Metalics a subscribe at all in your books?
I have not tracked this but I continue to be positive on the commodity space. You have to be tactical here. I think you are better off playing larger guys like Tata Steel, Jindal or Hindalco. You will see significant deleveraging of the books. There has been some consolidation. Obviously, the move was very sharp – almost 4-5x for most metal names. Prices continue to remain firm. I believe that the economic cycle is going to turn around.
Which stocks are you looking at within the FMCG space?
I do not look at it in terms of market cap. In the consumption space, we continue to like Tata Consumer which is now a part of Nifty. Their distribution reach has grown by leaps and bounds. They are now at almost 2.5 million outlets. HUL is almost 10 million. That tells you that there is a long runway ahead. They have gained market share in Sampann, salt and tea as well. They continue to get into new categories. Marico looks good, again for the same logic. Other than hair oil and edible oil, it continues to expand into snacks, home consumption pockets like oats, honey, etc. I also like fast moving electrical goods rather than fast moving consumer goods. I think there is a revival in housing. PolyCab commands half the valuation of Havells. It is probably transitioning from a proper B2B to a B2C player.
What is your take on Pidilite? It has been a solid performer. What’s next? Can one still buy this stock?
At this price, it is a very difficult call. It is a boring business which continues to deliver. If you see its price chart for the last five years, it is a straight trend line. The business composition looks good. Adhesives continue to do better. I think the big growth has been in construction chemicals, water proofing, etc where the volume growth is in double-digits. It may be a better buy on dips. You have better choices in steel pipes, cables, wires, etc if you want to play the building material space. But it continues to be a core holding for me personally. Any dips in stocks like this or Asian Paints is always welcome.
