Power is where there was a lot of excitement. It is not that India is not consuming power, but the excitement from power stocks has gone.
Chakri Lokapriya: Power will continue to do well. If you look at the power demand, the gigawatt capacity that India is going to add over the next five years is more than the combined power in usage in the entire European Union. So, that is the scale of activity that companies will need to add. NTPC will lead the whole effort. It is a PSU company, it has natural advantages in getting government clearances. Then, there is the combination of both thermal and renewable power. India has to sign up for environmental regulation only in 2070. That means for another 30 years, thermal companies can add capacities in India. So, with a combination of both – renewable as well as thermal – power will do well. Maybe they have paused, but secular growth is still there in NTPC, Power Grid, Sterling & Wilson, and Suzlon. Across the board, there is huge growth.
Has Ola come and gone really? Is it a stock that is here to stay? Can it do what Zomato did? Can it do what Paytm did?
Chakri Lokapriya: In terms of its valuation, the company is a valuable player in the electric vehicle space. In the last couple of years, its market share was probably about 12-13% and in the last couple of years, Bajaj Auto and TVS Motors have increased their market share in the electric vehicle space. So, this seesaw will continue over the next few years until Ola establishes itself. Its valuation, on the other hand, is at least four times that of TVS Motors and three times that of other regional electric companies. Until it catches up, valuation-wise, the stock is likely to tread water. Yes, it has cell manufacturing too, which will help its valuation, but that is a story for a couple of years later.
Which end of the pharma chain would you like to pick up?
Chakri Lokapriya: We will continue to look at companies that have a bigger exposure to the US, the largest healthcare market in the world multiple times. Therefore whether it is generics or even APIs, the price erosion is a perennial factor that will continue and so it all depends upon companies’ innovation and the exclusivity periods that they get.
Against this backdrop, being an election year and all that, once a new government is in place in the US early next year, then again, the emphasis on healthcare will improve. So, Indian companies catering to the US market will continue to be of importance.
Where do you stand when it comes to the entire FMCG basket?
Chakri Lokapriya: In FMCG, the weakness persists. The latest data shows that the volumes have not yet picked up. Hopefully, as we go towards the festive season in a couple of months, things will start improving. It is a wait-and-watch approach. There’s nothing new or incremental that we are buying in FMCG.Coming to midcap recommendations, what will you be looking at as some of the top views for the long haul or top stocks?
Chakri Lokapriya: Tata Elxsi has corrected quite significantly. Now, it will benefit from the IT tailwinds and the IT end of the manufacturing segment will pick up fast. I think Tata Elxsi will be one of the good beneficiaries.
