On the first day of the Amazon Great India Festival sale, Samsung sold phones worth around Rs 1000 crore and I asked this because the 5G rollout is happening soon and on Saturday the Prime Minister going to make an official announcement and we were just looking at some of these data points in terms of incoming internet usage.
Opt for telecommunications companies. I think
has a bright future ahead of it and a lot of clarity has emerged regarding 5G rollout and investment plans. Vodafone’s case continues to deteriorate. This would allow both players to continue to gain market share. It’s like bread and butter for the country’s digital ecosystem and eventually they will end up raising their rates.
They may use the 5G plans or may even consider other strategies to increase their returns, but as that happens we will see a lot of downfalls. I think rolling out 5G won’t be as difficult. stress on the balance sheets of Jio or Bharti Airtel and they are companies that can grow secularly consistently for several quarters given the kind of track record they have and the low level of penetration.
So I’m very positive about these companies. There are no online retailers one can buy from to take advantage of this increase in online shopping. A stock that comes to mind is
and if overall there’s a huge shift towards online shopping over the festive season, then Nykaa won’t be too far behind.
Also Read: Dipan Mehta bullish on IDFC First Bank and AU Small Finance Bank. here’s why
“ Back to recommendation stories
What about the good old classic theme that India will grow, Indians will need more houses and no matter what happens in the world, one segment will always grow, i.e. the cheap housing? Some of the housing stocks or low cost housing companies of the end didn’t make any money?
Yes, that’s true, but the real action is now in luxury and semi-luxury apartments. We heard what there was to say. Real estate has a big opportunity in the next six, seven, eight years and this increase in interest rates is a simple aberration. We may have some impact on sales, but ultimately the demand for housing is so huge and the aspirational value is so high that it will continue to drive more and more people to buy new apartments, larger apartments.
My direction and my strategy is to be with the strongest players, those who focus on monetization companies like
, DLF and . These are the best games to ride this boom we are seeing in real estate companies. No doubt the valuation appears to be fair at this point, but these companies are continually adding new projects through acquisition of land banks or through joint ventures.
I would say that the next few years are very good for the real estate sector. There are also a few other smaller players, but when the industry is doing well and if you want an industry where there’s a high degree of earnings volatility and a rocky balance sheet, there’s more comfort in large-cap players who have achieved good balance sheet quality and who also have diversity in terms of projects.
Just an extension of the kind of large capacity coming on board for cement players. We saw the focus on infrastructure and we also looked at real estate. The cement seems to be in a good space. But do you bet on cement or do you go on the line and look at some of the other derivatives that help infra and real estate per se?
In cement, we’re going to see a clash of Titans big and small, and the way the industry is ramping up capacity hasn’t been seen in many years. It’s like continuing to add capacity so as not to become useless.
This will eventually cause a glut in cement prices. The kind of price discipline this sector has maintained over the past few years could be flawed. In the last two quarters they have not been able to pass on cost increases and going forward I don’t know how that will be.
Of course, the long-term outlook for cement is great and we all know the infrastructure story as well, but ultimately volume growth is around single digits.
Given the evolution of capacity, I don’t think he will find a market for everything. So I’m very bearish on cement right now. Valuations are also cheap and these companies are available at multiples of 10 to 12 PE, they quote at 30 times the price on earnings multiple, return on investment, return on capital employed is also not spectacular enough to justify this type of PE multiples. The track record is good, but going forward, given how disruption is happening within the industry, I will be extremely cautious.
What is the best way to participate from an infra point of view?
It’s simple. Just buy L&T. A disclosure, we and our customers are invested. Look for smaller businesses and niche businesses. But L&T regularly improves the quality of its balance sheet and has sold some buildings of its subsidiary, which has been a bit of a brake. So it improves the quality of its balance sheet, it picks and chooses its projects in India and globally as well so that the margins are protected and can even improve as the implementation progresses.
There are projects in India that only L&T can execute and when you want these big infrastructure projects to generate revenue of Rs 5,000-10,000-15,000 crore, there is no other challenger for L&T .
A lot of value has been created in the subsidiaries and overall they have very aggressive quality management. It’s kind of a must-have stock in the portfolio if you want to bet on capex recovery and the whole infrastructure story. So rather than buying cement or other games, we are placing our bets on L&T right now. Again, a disclosure that we and our customers are investing in it.
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