Bharti airtel shares: Deepak Shenoy on Bharti Airtel, LIC listing and move to D-Mart

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“I would like a 50% correction in many FMCG stocks because they are probably 2x overvalued but I don’t think I will get that but I still don’t think they are attractive prices to buy,” says Deepak ShenoyFounder, Capital spirit.



What do you write in pencil when it comes?
We own Bharti Airtel so we are very biased but one of the things I’m looking forward to is that they have been the biggest gainer in subscribers compared to Jio and Vodafone. We should see good numbers. There was a fare increase, we’ll have to see how the African play went; but in India too, we need to see how much data usage is increasing per user.

I think ARPU would have increased by 20-25% over the last 18 months. It’s a great game for the future, as it seems to become a two-player game. Vodafone doesn’t really invest or talk about the extra investment it can get. So Bharti is one of our positions. This will be a key position in the future. Debt is a challenge and we will need to determine how interest rate changes will affect it.

We will wait for comments tomorrow before commenting further, but this is my biggest concern about the impact of interest rate changes on debt.

I’m curious if you’re just sitting on silver or have you rolled it out or started rolling it out in the recent downturn?
One of our strategies is momentum, where she looks at the kind of momentum that exists in the market that seems to be going into the money. The algorithm tells us to invest more and more in cash, but if you look at some of the fundamental strategies that we have, we actually added a lot more in some of the stocks where we had some conviction, but the price n wasn’t so great back then;

is one and we own it and so I’m pretty biased. The results came in recently. These are terrible results, but going forward we see both construction equipment and tractors and their rail arm doing relatively better than before.

Also, with the ownership now held by Kubota, there will be cancellation of two crores of shares, or just over 10% of the company’s capital, simply because it is owned by a trust which is owned by the company and one of the things that happened when Kubota took over was that that entry would be cancelled. Thus, EPS increases by a fair percentage simply because of the cancellation of shares. I expect this business to succeed. I’m biased there, but we’re buying slowly and steadily over the next few months. We expect the markets to remain choppy and provide us with opportunities.

What else do you keep on your watch list?
We’re pretty bullish on large-cap computing. is one of our holdings. We are also adding a bit more in the banks. We haven’t been into the banks as much in recent years, but this interest rate cycle seems to be very positive for the big banks for two reasons; one is that the short-term interest rate differential. The banks’ ability to park excess money at 4.4% while their SB rates are still at 3.5% and that gives them a bit better margin on CASA.

Previously, it was much lower in terms of margins. There is also a problem in the NBFC world that is turning a bit upside down. Lending there will be more limited as more regulation started from April this year and a lot of that lending will start going to banks because if NBFCs were to be regulated as banks they would not have access to relatively cheaper capital than the banks. .

The favor will go to the banks and we are buying some of the larger cap banks and not yet looking to venture into the mid caps. These are the two major sectors. We have a bunch more, a lot of corrections in the market. So choose them piece by piece including Reliance. Reliance is also a great buy at this price, but too much stock. I will therefore stop there.

Tomorrow will be one of those biggest lists in recent times. What should an investor do because they expect listing to be a little lukewarm?
Personally, I think it’s a good stock to hold for the longer term. Even with the public sector unit reduction, it is reasonably undervalued. A huge accounting change is happening within LIC and this change will be visible partially at the end of the FY22 results and in all of the FY23 results.

This is partly because LIC was a mutual company and had no shares. So a lot of the policies weren’t really shareholder friendly because there were no shareholders. Now they have changed the policies to be more like what some other insurers do, which is more common. So reported earnings and what will be reported in subsequent years will be a pretty big jump even in FY22.

We might see a positive surprise when they finally announce results and so I still think it’s worth buying, should it be available at the IPO price or even below. Of course, you have to be sure that each market can easily take a beating of 20 to 25%. If you can’t stand that kind of volatility, this market is definitely not for you and maybe LIC’s IPO isn’t as good even after listing.

What are the prospects for Paytm, , or even Nazara Tech? Today came out with their operational updates which seem to provide some kind of rescue to the stock. What is the general rule when it comes to looking at these companies?
I can’t comment on Paytm for other reasons, but I think a lot of players in this tech space will follow what happened in the US, which is an absolute beat profile for many stocks. Whether it’s Zomato or Nykaa, the same fears that are driving down tech stocks around the world are also driving those stocks down.

Also the post-IPO equity release that will probably happen for Zomato in July and for the others in November and so on will provide a bit more liquidity in the market in terms of people wanting to sell and that could be a another pressure point for those actions.

However, these actions must show a desire for long-term profitability because they are now public and must be able to demonstrate that they can generate either through acquisitions or by themselves. The ability to generate positive and free cash flow is the idea behind the technology. If we generate a lot of cash flow, a lot of it will be free cash flow, and that’s why Googles and Facebooks are such popular businesses.

It may take a few more years before Indian companies can demonstrate this, so we could see some of these stocks languish in the short term. But as they show results, we will be able to better appreciate how they do things and there are non-cash elements in some of their balance sheets, in particular like that of Zomato where the remuneration of the founder of Esops hurts profits.

About half of the losses come from Esops, which is a non-cash item. So they have to pull that out and see how the business really works. I will wait for more data on this. However, I say proceed with caution. If you’re not a long-term investor, these stocks won’t work very well for you. Play them on the technicalities, but it will take four to five years for the fundamental show to come to fruition.

Curious what you thought about Adani finally winning Holcim’s entry? What do you think of a group like Adani betting on the cement sector? This gives an idea of ​​the type of stimulus in investment spending that we are going to see, not today, not tomorrow maybe in a few years?
I hope so. We’ve been waiting for so long for an infra revival and an investment revival and the problem really is that capacity utilization across the country is very low. It’s not at the 80-82-83% levels that would require this capital spending to continue and with interest rates rising I don’t think people are going to put in place big capital projects today. However, this acquisition may be more like a five-year brainstorming process, plus the fact that for regulatory reasons it may happen now for whatever complex methodology they use for their royalty calculations etc.

It’s more like they’re starting to build a business where the cycle will really turn in two, three or four years. Of course, cement players will become extremely competitive. I hope the cartel will be broken, but given the history, I have no hope. But in general, that puts to rest all the speculation that has happened over the years about who Holcim would sell and whether or not it would, etc.

Finally we have something happening there but I think cement renaissance is only going to happen in five years and if you play capex renaissance history there are better players than cement with whom to play. I would just avoid the area right now.

What do you think of the FMCG package? The numbers were a little tepid. How do you see this stock as well as the whole FMCG pack?
D-mart is an interesting story because its actual float is very low. So a bit of news here can lower it by 10% or raise it by 10%. Generally it has gone up over the last couple of years but right now the upside seems a bit overdone in regards to the fact that the results weren’t that good and they have a lot of competition to come , even in the physical store. area .

That said, D-mart is a very strong story. Their margins are among the highest among retail players and if we were to look at the industry 10 years from now I think there will be a lot more D-Marts in India and a lot more household names than today. So it’s a good stock but I don’t know if it’s a good price to buy it.

Given the current situation, I’d probably add a bit of overtime assuming you can hold out for a 10 year period, but if you’re looking at shorter term gains, that might not fundamentally work to your advantage . I think it will be a great game in the longer term.

As for the FMCG sector, the margin profile has been heavily impacted by inflation, especially palm oils, etc. for some FMCG companies. The next three quarters we are going to see a tough situation on margins and as a result stock prices may not rise as much.

I would appreciate a 50% correction in a lot of them as they are probably 2x overvalued but I don’t think I will get that but I still don’t think they are attractive buy prices. I just think that when margins drop, stock prices could hopefully follow and allow us to get entry because we just want to own them at lower prices.

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