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They are doing the right job. They have transitioned themselves from a very traditional business of a website for railway tickets to a platform business and that is reflected in re-rated prices. The way they have transformed themselves is remarkable. People had never expected a PSU to do something of this kind and that is the reason why you have seen such a good movement in the stock price.
Coming to valuation, all these platform businesses are trading at very high valuation and none of us know right now what is the right valuation. The best way to play this is to stay put. The stop loss will be your friend. At some point in time, you will come to know what is the right price.
What will be the impact of the delay in the launch of the JioPhone Next on Reliance? Can it be Bharti Airtel’s gain?
Daljeet Singh Kohli: Prima facie yes it can be a short term benefit for Bharti or Vodafone because there was an expectation that Jio may transfer many of the existing clients of these companies to JioPhone Next. Since that is not happening probably for a couple of months, they get a breather. . But I think that gain is only temporary because ultimately this is going to happen. This chip shortage is a global phenomenon and so there may be one or two months’ delay.
The only thing we have to watch out for is what impact does it have on the ramp up because a two-month delay is fine, we can manage but the kind of ramp up which was supposed to be coming from this JioPhone Next, will that happen because of the production delays? Acceptability is the second part. Whether customers accept it or not, is a secondary thing. The first thing is whether this company is capable of doing that or not.
So I think the one to two months will be a very important factor to watch out for. We are maintaining our positive view on Reliance, not just because of this. There are many other reasons for it and we believe that because of this delay, it is an opportunity to get the stock cheaper by 2%, 4%. So one can accumulate it and this negative news will actually help.
How are you approaching these FMCG and consumer stocks?
We are constructive on the sector. I think the commentary from the
management has been extremely bullish and they have spoken the language the market wanted to hear. They are changing as per the requirement, going for digitisation and launching the app. The fact that this very big company is coming forward and saying that they understand the need to change is what the market liked.
Even before the analyst meeting, the stock had moved up from Rs 2,400 to Rs 2,800 odd. So valuation wise, there is not too much scope. A disclosure, we do not have any FMCG stock in our portfolios, but in August, in our note we had expected that FMCG — which has been a laggard for the last six, seven months — should play out and that has played out. For a fresh opportunity we will have to wait for some cooling off in the stock prices or some fresh triggers to come in. But if somebody is holding it, he should continue to hold it.
