What did you make of the recent IPOs? We have had Nykaa, today there was Policybazaar. But look at Sigachi! 225% pop on listing, then a 5% gain. It hit the upper circuit.
Yes so many IPOs are coming in. It is difficult to analyse the valuations because some of them are really expensive. In between Paytm and Policybazaar, there are companies which are rightly priced and there we will see the maximum pop. We are still looking at the more hyped ones like Nykaa or Paytm. So definitely there is some potential in some of the IPOs there but it is getting so difficult with the valuation they are coming at.
It is better right now to look at opportunities in the listed space rather than investing in these IPOs because anyway they get subscribed multiple times and you hardly get anything. So rather than deploying your money there, go for opportunities in the listed market.
What is your advice when it comes to healthcare space, hospital chains, diagnostic labs and pharmaceuticals?
In the healthcare space, hospitals is one space which is very interesting. The kind of results we have seen from Fortis and Apollo, the kind of margin they are trading at and the way the top line is growing because of the health policies, because of the increased care that one wants to take of the health after Covid, the top line of hospitals are going up. It is really helping in the margin improvement which I feel should be the case going forward also.
From these levels also, one can see margins improving further because once the operating efficiency reaches a particular level, it definitely gets more improvement. I am positive about hospitals. Even from these levels, one will get decent return in the hospital space.
Where within autos and auto ancillaries are you finding investment opportunities?
I am more bullish on the commercial vehicle space because that’s where demand is picking up in medium and heavy scale vehicles. Speaking to some of the financiers of trucks and heavy vehicles, we found that they have seen good demand in the current quarter also. So that is one space we like. In Ashok Leyland, going ahead, once volume picks up for commercial vehicles, their margins will also pick up further. Ashok Leyland can then come to a decent profit from the small loss that they are having till now.
The vehicle space is one and even related auto ancillaries which are catering to these commercial vehicles, like Jamna Auto is a space I would be positive on.
According to you, what is the fair value for ?
ITC has been a favourite pick of everyone. Even in Diwali picks, ITC was one of those picks because value-wise it is definitely the cheapest FMCG stock. Break the FMCG and the cigarette business and the food business and there is a huge potential as far as valuation is concerned.
Compare it with the multiples other companies are getting, ranging from 30 to 50 times, ITC is nowhere close to that. So once ITC starts performing, there is definitely a decent upside potential from these levels right, the stock can easily go to Rs 350-400 levels but then because everyone has been so positive and been holding on to the stock, there is a lot of selling along the line when the stocks go up. But if someone has patience and holds it for a couple of years, the stock easily has the potential of giving 30-40% return over the next two-three years.
