How are you looking at the Tata Group of companies? Which ones would you buy now?
Buying
because after the results the stock came off by 6-7% and so it is giving a good entry point. We believe the result disappointment was just an aberration and not a permanent reversal of trend. Regarding , we have had positive news after a long time. Last time when it came down because of the chip shortage issue, we used that opportunity to add on to it and so that has helped a lot. Fresh entry on a day when stocks are 20% or 15% up is not advisable.
There are all kinds of people in the market, there will be traders, there will be people who have less money to roll over for a long time. They would obviously want the profit. We will wait for that opportunity when there is some profit booking and these stocks are available at cheaper valuations.
Tata Power has been our favourite for a very very long time I think it has already become five times from where it was. For a fresh entry, we will have to wait. There is only TCS which is giving the opportunity to enter right now. On Tuesday also, we added it in our portfolio also.
What do you think is happening in the pharma pack?
On the pricing front, things are not so bad. They are stable now and there is no change on the US API and no issue on the bulk drugs front. think the market reaction is more that this is one off from COVID ad that was related to all these antibiotics etc.
Second, the risk of FDA or regulatory overhang will start now because FDA has started inspection. Most of our companies have had something or other problems with the regulator at various points of time. Those issues are making the sector a little bit nervous, mainly the larger companies. But there are different pockets. Pharma is a heterogenous sector.
It is better to take a call on each company separately and then make a call on at what level they are in terms of regulatory issues and at what level they are in terms of product pipeline.
There is one pharma stock in our portfolio — Gland Pharma. There is no other stock right now but we also like Abbott.
One sector that has really come back with a bang has been the energy pack,. How would you look at this sector?
In our strategy note for this month, we had written that we are positive on oil and gas as well as infrastructure, capital goods space and automation.
In oil and gas, the differentiating factors which have come after 10-12 years is that their pricing is now more market determined. In the last four, five years, the government has not interfered much in that although earlier also it was a declared policy but we used to see that there was a lot of interference.
Second, the gas price itself is going up and the APM price itself has increased by 62%. So this increment in the prices will result in a lot more benefit for these upstream producers. Our preference is for upstream companies like ONGC, OIL and HOEC. We are avoiding oil marketing companies and the downstream companies and are only going for the upstream companies.
In case of infrastructure and capital goods, we have a position in Bosch which is into industry automation. Siemens, L&T are also a part of that but none of these companies are in our portfolio as of now. But we are looking at them seriously and maybe some will get into our portfolio.
