On Zomato
Stocks like Zomato are typically for investors who have a high appetite. The appetite will be high now given that we are still at very high levels in the market and the overall appetite is good though we may see a bit of volatility. If you look at a couple of deals which have happened globally in the similar space, adds to the overall comfort factor for a lot of investors.
We will have to watch out for incremental triggers for Zomato; what sort of quarterly numbers they are throwing up and more importantly if we are seeing any big positive surprises that can invite the attention of investors.
We think that Zomato is already getting a crazy valuation and there are some incremental positives over the next one or two quarters. People may decide against taking risk at these levels of the market in a start-up where the overall profitability will take a longer time to emerge. So from a short-term technical perspective, it is a great idea. It has played out well but from where we are right now, we need to see what sort of incremental positives we can expect.
On auto stocks
There are two aspects to this. One is that companies where you are seeing a much better demand environment but because of the supply issues, particularly the chip issues, the companies are not able to produce and growth is getting hampered. Then there are sets of stocks in the two-wheeler space where there is no major chip related issue but the demand environment itself is not looking that great.
Given that the festive season is around and some of these car makers and even the global auto ancillary companies have corrected, that could provide a good entry point into some of these names. So, Maruti, , are the names that are likely to do much better once we have a little bit of clarity on this supply related and the chip related issues.
But on the two-wheelers we do not have much clarity. Let us wait and hope that this festive season throws up some good positive data points and only once we get some revalidation of that growth coming back, would we really turn positive on two-wheeler stocks. For the time being, let us go with the passenger vehicles, Tata Motors and Bharat Forge.
