What is the view on autos? They have peaked out or there is still value on the table?
Anshul Saigal: In the auto space, we have seen that particularly in the four-wheeler space, there was a scarcity premium that one or two companies were getting. Now, with a new listing in the four-wheeler space, that scarcity premium no longer exists and definitely, the longevity of that scarcity premium does not exist.
The second thing is that we have heard recently that there is huge channel inventory which the four-wheeler players have pushed into the distribution system. Now, with that, plus that is leading to discounts of vehicles. Now, with that in play, it looks very tough that we will see tailwinds in earnings and we will see that getting reflected in stock prices. So, particularly on four-wheelers, I think that we have tepid times ahead.
On two-wheelers, clearly the space that they are catering to, the segment of the market that gets demand for them, that segment is picking up, their incomes are picking up and it is likely that there will be tailwinds in demand in that segment. Tractors and then if you look at CVs, I think that in that segment there will be stock-specific opportunity, not a broad-based trend that one will see in that segment. So, you will have to look at autos as different segments and take calls accordingly. This will be much more of a stock-specific space to be investing in rather than a broad trend that you can see in the segment as a whole. I think that that is the way to approach this space.
Curious to just get in your take as to what the outlook is when it comes to L&T. How would you read into the quarterly numbers because it has been a beat on the overall revenues and EBITDA, how have you read into the overall order inflow and that has seen a 10% uptick on a year-on-year basis, has that been satisfactory? And what is the view on L&T?
Anshul Saigal: So, I would refrain from giving a stock call on the name, but let me just give you a broader picture on what is really happening in this space. This is a space which has seen significant tailwind in demand in this space. But in the last six to eight months because of the elections and other attached reasons, we have seen government spending come down.
Also, ordering activity has been kind of weak in this space. On the back of that, L&T giving strong numbers is a welcome change and markets will lap that up very nicely. They will like the fact that there is a beat on expectations from L&T, because this is the bellwether in this space. But clearly, in the infra space there is room for substantial upside going forward.
There is room in various segments of the infra space whether it is roads, ports, airports, all across, we will see activity. Even building and construction, we will see significant activity and this company plays directly into all of these segments.
So, time seems strong and good for this company going ahead and because of really no other option for FIIs to invest in this space, or I would say that only one large player in which they can put big moneys, this company should be really a beneficiary of flows into the business. So, by and large, this has been a good result and that should reflect in investors sentiment in this space.
One Diwali idea at least for our viewers.
Anshul Saigal: So, I would say that fashion retail has been one space which has not seen significant tailwinds in demand. In our judgment, if we can find quality businesses in fashion retail, which have been laggards in the last three-four quarters, but where the trends are changing going forward, I think there is a lot of money to be made because the disparity in valuation between the leaders and some of the laggards is just so substantial that that gap will be bridged over a period of time. And since it is Diwali, I will give you two ideas.
The other space to look at is banking and finance. I think that that is a space which has been down and out and like
how. Just to give you an instance, there is a stock that I tracked. This company now trades at five times price to earnings at a 3% to 4% dividend yield. And here, all the NPA issues are behind us.
Going forward, NPA issues are not going to plague the company and growth on credit is likely to be over 15% over the coming few years. Also, the CD ratio issue, which many of the banks are facing, this bank does not face yet it trades at five times price to earnings.
So, I think banking and finance offers tremendous opportunity, so does fashion retail. Those are the spaces that we are investing in and I think investors will be well advised to look at those.
