Coming to Paytm, Choksey further says that it is not completely shunned, but till that time they start showing profit on any of the product lines, he will not be in a hurry to buy it.
It is evident and it is a trend that auto companies are now happy to give discounts, waiting periods are over. You walk into a showroom, you get a car and you get accessories free along with a discount. But that is not having an impact on auto demand per se. Even though the numbers are not growing, discounts are back, auto stocks are still holding on. Why is that?
Deven Choksey: One point here is that it may not be a permanent thing that the discount is continuing. Today, in these particular times, we are seeing a discount for a variety of reasons. The consumer is waiting for the interest rate to come down, that is one of the reasons as I would like to call it
If the cost of funding comes down, my guess is that the demand is already there in the system. Maybe we are going to see a surge into this business. Second most important aspect, waiting for the new generation of vehicles to come and hit the road. 2025 starts with Maruti coming up with the electric vehicle launch and the majority of the large segment of customers, the mass segment of the customers, would prefer to buy into the electric vehicles going forward, so that is one of the reasons for which you are seeing this particular situation.
Of course, Tata’s electric vehicle also is facing a similar situation because currently the hybrids are getting the registration discounts in states like Uttar Pradesh. So, these are some of the factors which are basically affecting the electric vehicle demand, but I do not think that is a permanent loss. I do not think that we are going to see the permanent downside in the demand for cars.
Somewhere down the line once the crop season starts yielding revenue in the hands of the rural masses, probably you will see the demand returning back for passenger vehicles. Fortunately, the good demand continues for the two-wheelers and including the electric vehicles in the two-wheelers and fortunately the commercial vehicle segment remains absolutely strong and upbeat. So, we remain distinctly positive about the two-wheelers and the commercial vehicle, while we believe that passenger vehicles would have the reason to recover going forward after these challenges are over.
What are your thoughts on the entire energy transition play and I think Waaree as well, as of last evening, got the go ahead for its IPO. Where is it that you are finding value in such a large theme because this is almost like PSU of last year.
Deven Choksey: Yes, absolutely, but the good part about this particular journey is that we are seeing some good quality names coming out in the public market. And though I agree on one aspect that most of these companies will have a very long road before which they start talking about giving some big value to the investors, including NTPC Green. But I believe that this journey is basically the next 5 to 10 years kind of a journey in which many of these companies are likely to see a significantly large amount of thrust. For example, in the green hydrogen space, the demand generation is going to come from the refinery space, the metal space, the engineering space, who are the bulk users of the power. Therefore, the generation of demand is going to be significant. And over there, whoever is following the captive route, they are likely to see the cost of energy coming to them at around Rs 3 to Rs 4 per unit eventually in the next three to five years. So, from that perspective, today whatever the energy cost that you are paying, either one-third or one-fourth price at which you are going to get this energy, which is going to be a game changer for the user industry. On one side, we are certain about it that capital intensive businesses like green hydrogen will survive and grow, on the other side we believe that the larger beneficiaries would be the consumers of industry, that is the power users, who are basically the refinery or the fertiliser or the metal commodity or the cement commodity space, those kinds of players are likely to be the larger beneficiary going forward.
Whoever is having the captive use of this power, they are undoubtedly going to be talking a significantly large amount of balance sheets going forward as a user. So, we like to see how exactly the success comes out of Adani Group, how exactly the success comes out of Reliance Group in this kind of activity. Even fairly confident that this is a space where you will have to be investing and probably make good money in the next 5 to 10 years.
Any thoughts on Paytm? Are you looking at this story or re-looking at this story at all or completely shunned it off?
Deven Choksey: It is not completely shunned, but we believe that till that time they start showing profit on any of the product lines that they have talked about, we will not be in a hurry to buy it. Also because of the valuation at which the company is quoting, even if they get into the slightest of the profit, it is not going to be a game-changer at all.
So, unless they show the sustainable path for making profit to the products like loan distribution that they are talking about, I would think that we would like to wait for some more time. In the meantime, you are getting plenty of other opportunities who are basically giving sustainable output on the business side, so that is probably where our approach would be. We continue to focus on quality franchisees more than hopes and expectations on Paytm.
