MOFSL
Now that the Zee-Sony deal is done, can the stock see a bigger rerating and can it push forward even further than it already has?
The development by itself is quite momentous for the media sector and of course for Zee and Sony. What is important to note is that there could be a lot of synergies given the fact that there are two formidable players coming together and each one can bring its own strength and synergies in terms of costs. But from an investment perspective, what remains to be seen is why Mr Punit Goenka is continuing as the MD when there was so much controversy around it and the reason why we had seen such a big spike up in Zee earlier when there was a push by some shareholders to remove him.
There was a sense that there would be a new board in place which would have far more credibility and the entire corporate governance issues could be behind them. That was one of the reasons why Zee underperformed and derated for such a long time, despite being such a strong franchise in the broadcasting space. It remains to be seen whether the current promoters of Zee with just 4% of the holding can choose to have their own board members and how in the combined entity, the right to select board members would pan out.
Overall our feeling is that broadcasting is a difficult business to be in and if there is a good franchise with a solid growth potential, people would be excited about it. So, we will wait for further details on some of these points before we firm up our view.
IRCTC is a stock which is a clear play on lockdown. Does the unlock trade deserve a PE multiple north of 70 times?
IRCTC is not being viewed only as a unlock trade but it is more of a platform play with some sort of monopoly because of the kind of positioning that they have and the sheer volume growth that such companies can have, given the fact that for the number of people wanting to travel by train and the other ancillary services relating to food etc, the potential can be very big in terms of numbers.
We have all seen how the technology platform as a space is getting recognised in India and the kind of interest in valuation that they are getting. IRCTC is being viewed like that. The other important aspect is that the floating stock for such companies would be extremely low, though in terms of market cap, at about almost Rs 60,000 crore, it may look quite big. If one looks at the floating stock, it is very less. There are a lot of investors both on the institution side as well as PMS and HNIs who would want a piece of such stories and because of the lower floating stocks, sometimes they end up chasing the price and the valuations can be higher.
One can definitely consider having a small allocation for names like this because sometimes depending on how the stories unfold, one might see a further rerating and growth going ahead like we saw for companies like Naukri and other platforms. One should look at it in a very different way and make some small allocation towards it.
The IT boom in any case has been impacting the Bangalore-based real estate players and now the stamp duty cut on real estate in Karnataka is only going to further aid this sentiment?
Absolutely. Apart from the fact that there is some stamp duty relaxation in Karnataka, in September, the registration numbers have been extremely good in Mumbai as well. Month on month, we are seeing significant improvement in the number of registrations despite no such stamp duty relaxations for Maharashtra. This bodes well for a whole host of companies, particularly companies like
, Macrotech, Oberoi, Sunteck, which are exposed to Mumbai and of course Karnataka, which has the added benefit of stamp duty cut.
The IT space is looking quite positive and they might really look out to expand and that bodes well for a place like Karnataka and of course Chennai and Hyderabad also. Overall, we continue to have a positive view on the sector and we think that Godrej Properties, Macrotech, Oberoi, Sunteck and even Brigade and Prestige are very well placed to take advantage of this sentiment at this point of time.
When financial markets are booming and SIPs are the order of the day and brokerage stocks are at a multiyear high, why are AMC stocks not flying high?
In the past two-three months, we have seen a decent amount of uptick even in the AMC stocks because we believe that in the entire financial services ecosystem which starts with the brokerage stocks and the AMCs, NBFCs and of course the exchanges and the depositories, we are seeing a very strong traction. When you see 25 lakh accounts being opened per month across the brokerage platforms, ultimately some of these customers would move to products like mutual funds and PMS and a whole host of other products which are there even in terms of investment advisory that small case kind of firm offers.
We think that eventually in a bull market this entire ecosystem will do well and there are going to be investors who would want to allocate a certain amount of their money towards this theme and within that, there will definitely be some space for a name like
or Nippon or UTI for that matter. Although relative to some of the names like brokerage etc, AMC was a bit slow to respond but the fact of the matter is that it is a stable business where the operating leverage would be very high with a decent amount of growth. Now, we are at almost Rs 40 lakh crore and so a decent interest is coming back in those names.
