‘Or­gan­ised Busi­nesses to Do Bet­ter Go­ing For­ward’

The Economic Times - - Money -

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

IN­VEST­ING STRAT­EGY

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.

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