‘Organised Businesses to Do Better Going Forward’
Demonetisation is the single most important economic reform India has seen after liberalisation, says Porinju Veliyath, founder and CEO of Equity Intelligence India. In an interview to Rajesh Mascarenhas, the ace stock picker points out that stocks, such as TCI, HSIL, Tata Global, Future Group, BBTC, Bengal Assam and Vindhya Telelink, are looking good though some of them have moved up recently. Edited excerpts:
Sensex has rallied over 7% so far this year without much support from earnings. How far away are we from recovery in demand? Do you see further PE expansion from the current level? Demand has never been under question in our country which is home to about 1.3 billion people. With a majority of aspiring and energetic young people, we don’t have any option but to grow. Decades of political mismanagement had left our economy in dire straits. Today, for the first time since Independence, we have a strong central leadership with a vision. Looking at a few months of statistics to evaluate a great nation’s prospects is myopic. With clearer and big-picture vision, the quality of future earnings in India could be better than ever before.
Is 2017 a good year for equities? How much more upside can one expects from the Indian markets by December? Every year in my 27 years of investing career has been good for equities, and 2017 won’t be any different. Forget about Sensex and Nifty. Go out and pick stocks. There are several potential multi-baggers out there waiting to be grabbed by smart stock pickers.
How do you pick multi-baggers? Multi-baggers cannot be picked; they evolve. When you invest in 10 potential multi-bagger ideas, two or three of them will really make it big, while one or two may fail. That is how it works. What is more important is keeping your eyes and ears open to ideas and grabbing the opportunity when it arrives.
You recently said that TCI, HSIL, Tata Global, FCL and GIC Housing are your favourites. Are these
stocks still a good buy? In fact, I was suggsting investors look for some great buisnesses, where the stock price has either declined or been stagnant in 2016, instead of running after fancied and performing stocks. TCI, HSIL & Tata Global are looking good though they have moved up recently. I have been holding them.
ON HOLDING COS
Some of the stocks from retail businesses have rallied on the back of the D-Mart IPO. Is there a good entry point in retail names now? I have been bullish on Future Group stocks since last year. I am betting on the dynamism and vision of Mr Kishore Biyani and the prospects of his business model. My positive stance has nothing to do with the DMart IPO. Of course D-Mart will do very well. Mr Radhakrishnan Damani, an old friend from BSE days, as we know, has the vision and wisdom to make it much bigger.
You have also been bullish on holding companies. Which ones do you reckon are good bets among the holding stocks? Most of them have moved up recently, still leaving unsustainably huge gap between price and value. BBTC, Bengal Assam & Vindhya Telelink are some of the large businesses in the segment for investors to watch and buy during any potential weakness in the market. Which are the new themes post demonetisation —sectors or stocks — that look attractive? Demonetisation is the single most important economic reform India has seen after liberalisation and was a right step towards levelling the economic-playing field. I was bullish on stocks and sectors temporarily beaten down by demonetisation fears. With more and more financial results coming out in Q3, the demonetisation is turning out to be a nonevent as far as listed companies are concerned. With demonetisation and the Goods and Services Tax, organised businesses will do better. In fact, listed companies are supposed to be ‘organised’ businesses. Now, some small and mid-cap companies, which have traditionally been managed unprofessionally, will be forced to turn ‘white’ and professional going forward. Investors could pick their next multi-baggers from this segment.