What is your portfolio strategy? Just buying and sitting tight or are you easing off from some spaces and adding weight to others?
We have a process for realigning the portfolio, largely because some stocks have run up too much and so they end up having too much of a weight in the portfolio. We have taken some fundamental calls in some stocks and it has largely been shifting around. We have not moved any significant weight to cash or changed the overall focus of the portfolio.
We are in more stocks which have listed now like Zomato and we are looking forward to some more tech intense companies like Paytm or even LIC as they benefit from the advent of technology. We are making space for some of these as they get listed but largely we are staying put in terms of equity allocations and not really moving so much into cash. There are some opportunities that sound attractive and hopefully the markets will give us an opportunity to buy, but that almost always tends to mean that we are expecting a correction. I hope we do get one because it will be a good time to rejig the deployment in case of a correction. At this level, it feels almost criminal sometimes to buy stocks in a fundamental portfolio.
What are you looking out for from the Zomato commentary?
Deepak Shenoy: In July, post the quarter, there was the Zomato Pro Plus Program which should account for Rs 70-120 crore in revenue over the year. I would like to hear some commentary about how that happened.
Secondly, as they have Rs 15,000 crore in the bank, that should mean that much of the EBITDA loss of about Rs 200 crore will get covered by the interest income alone if they have put it in a reasonable kind of deposit or a fund and so they might actually see much narrower losses in the next quarter.
I would like to see both the cash flow from Pro Plus and how the interest costs are panning out in terms of the percentage of EBITDA loss that it covers. And then of course how they plan to counter or grow in the future. It is a little too early for us to ask for longer term thought processes here because they have just listed, but I would like to see the numbers and where they fall in.
Largely, I expect that growth will happen only towards the end of this year or next year. Right now it is still going to be a little lax.
Among the four IPOs that are issuing this week, I guess CarTrade is the largest. Has any of the latest IPOs caught your fancy?
CarTrade is another. I am a sucker for anything that is internet based sales. There is a lot of scope here. We are invested in most of the ones that have come including Zomato and I look forward to adding a little bit of everything. A little bit of everything is good but I think this is where scale has a role to play because you could get a business which has a tremendous amount of runway ahead. The Indian automobile market in general is relatively underpenetrated. We sell three lakh odd cars a month. Developed countries probably sell a much higher percentage compared to us, but we sell as much as France does in a month roughly.
But given that the sales which progress from here will not happen through physical distribution, a lot of it is going to happen via internet. There is not just one, there are at least three players that have a significant internet presence. So CarTrade is an interesting IPO to watch out for.
I am also looking forward to the Nykaa IPO. We have players which have not reached their potential yet and are now exposing themselves to public markets, to public scrutiny as well so we would like to see how they perform in that context. But some of the others we are not really interested in though there may be interesting financial opportunities. The scale is not quite as much. We have a dichotomous view; iIf there is a big runway, we want it; if there is not a big runway and it is just a decently performing company, then maybe not in a time like this. We will look at it at a time when the markets are down.
