Have to begin by asking you, HDFC Bank, we have all seen those false starts. Is this a lot more convincing this time?
Mahantesh Sabarad: Looking at the banking space and looking at the way HDFC Bank is moving up, it does appear that these false starts that we had seen for the past two years is now not the case. The entire banking space is likely to do better going ahead, simply because you are emerging out of a situation where you will have better credit growth ahead; you do not have asset quality issues anymore and all the consolidation that you had seen in the past is done with.
And we are going to enter a cycle, an interest rate cycle, which will signal perhaps easing instead of tightening ahead. All these augurs really well for the banking sector as a whole. And therefore, I would say HDFC participating in that rally is something that is also coming out of their own situation, the past legacy issues of HDFC Bank are no more there to handle. So, they are riding the banking wave that we are likely to see ahead.
What is your take coming in particularly for Raymond and also if I could actually add Raymond now to the pack of the realty stock as well because after that looks like there has been a re-rating for Raymond, is it not?
Mahantesh Sabarad:
So, I think the real estate sector is doing quite well, particularly those which are linked to Mumbai city. You would find that among the largest or strongest growing markets for real estate in the past two years have been the greater MMR region, the Mumbai metropolitan region, particularly Thane. In the past, we used to see that real estate markets of Delhi, Bangalore would grow fast but particularly, we are seeing in the last two years Thane has been a very large growing market. Raymond has a direct presence in the Thane market in terms of real estate projects and even from a comparative perspective, Thane has been one of the fast-growing real estate markets. So, would not be surprised with the kind of development we are seeing on the Raymond stock. Having said that, even the other Mumbai-based real estate companies have been doing really well. Oberoi Realty is another one. Godrej is another. So, I believe that some of these companies exposed to the Mumbai real estate market or MMR real estate market will start tending to do better and let us not forget that we have new metro projects upcoming now who are just about to start which would lend a better kind of real estate growth to the greater MMR region.Since we are talking about auto ancillary space, which one are you liking the most in that particular domain because it is quite a vast domain, isn’t it? You have the ones that are into making the rims, into the wheel segment as well as into the engines and you have Amara Raja and Exide pretty excited on that particular front.
Mahantesh Sabarad:
So, when you look at the auto ancillary space — and I do agree it is a vast space to really cover. But if you spot the trends that are happening, whereas which is coming out of how the overall automobile industry is developing, there is premiumisation that is happening, that means more and more people are buying higher end kind of cars, which calls for greater, therefore, content per car that is coming in, which obviously augurs well for some of the auto ancillaries.
Point number two, in terms of trends that is coming up is that we are seeing some kind of policy consensus coming towards junking of cars. So basically, doing away with old cars. And therefore, that should start a very healthy trend in terms of overall automobile growth.
The third trend that we are witnessing is that the overall driving — the experience of vehicles is technology driven, getting technology driven. There is a lot of integration that is happening; tech integration that is happening within the automobile space. And therefore, some ancillaries stand to benefit out of that.
So, if one were to pick out of all these trends that are happening within the auto ancillary space, the trend that seems to be the strongest is the trend number three that I identified which is linked to the increased automation and increased technology usage within the automobile space. So, you actually start looking therefore not really in the auto ancillary space, but at engineering services kind of companies who are in the auto space, that should start doing really well going forward and not necessarily just the pure auto ancillary space alone. But the auto ancillary space that can do potentially well are the ones who have large replacement markets to look forward to. Tyres is one of them. Batteries is another segment which are not really OE dependent, but on a lot of replacement demand dependent, and therefore fits well with the overall growth theme that happens, which is linked to the junking of old cars, etc. So, would look at these spaces, engineering services space and the replacement market driven kind of space.
