Let us get a comment from you also going on this SME hullabaloo. Some are calling it casino, some are calling it gambling den, some are calling in Hindi juye ka adda. What is happening there?
Neeraj Dewan: Definitely the kind of frenzy which is there and we have seen these cases of small companies getting 100x, 200x, 400x kind of subscription amounts. So, one has to be careful, but what can be done according to what I understand is that there should be some awareness exercise which can be initiated, whether it is the regulator or whether it is the market experts, whether it is the media channels. So, this awareness is what is important. You cannot really tell someone not to invest in a stock. You have to make them aware that you have to invest in a stock based on valuation.
Everything that you invest in has to be studied properly because you are putting your hard-earned money into work there. I think awareness is what is important. And once people get aware and some of them will definitely burn their fingers in the process when some of these SME IPOs or the companies can go kaput and all of a sudden they stop trading.
So, we have seen that happening earlier also so which may happen. So, some will burn their fingers and some, based on the awareness exercise, will become aware and start investing in more high-quality names rather than investing in any other second IPO which is coming.I was just curious to get in your take on this entire retail space given the kind of ever-evolving consumer trends that we have been seeing, a lot of these companies as well adapting to it quite well. Who do you think is going to be the standout play or players within the entire space?
Neeraj Dewan: Actually, as far as retail play is concerned, one example, again, I am not recommending the stock. One example is Trent. The way they have created the business model and the way they have come out with stores, right now also they will have some stores which are maturing this year, next year. So, they have been coming and expanding and delivering again and again. So, one needs to wait for opportunities in those kind of companies. Though the stock has gone up a lot, so I am not really recommending at the current valuation. But I am just taking an example to give an idea. So, like Aditya Birla Fashion also like we are talking about some more restructuring happening there, capital coming in there, but we have seen the return has not really come for one investor who has invested in Aditya Birla Finance in last two years not made the kind of money which they would have made in other companies. So, retail and textile together and which they have right now is one which is not really that lucrative for the investors. So, once they separate the brands and separate the retail play, I think then the real value will emerge. So, I would look at companies which are specifically focusing on brands, that is where the valuation comfort comes and that is where you can give higher valuation also to those companies.
So, Suzlon, Yes Bank, Vodafone, let us talk about all three. What are your thoughts on these three stocks?
Neeraj Dewan: Again, to be very frank, I have not invested in these stocks recently, neither do I intend to invest in them. There are a lot of opportunities where one can make money and we have seen the kind of past that these stocks have had. Let us talk about Vodafone only. Whenever they have raised money, they got more money. They have just burnt it. And again, they have come back to raise more money and they have been rescued a lot of times.
They are still losing their subscribers. So, I am not really a fan of these kind of stocks. So, I would rather look at companies which are doing very well. They are down for a reason for a particular time. They may consolidate. Again, one example, like just to go off the topic, like Globus Spirits was one company which went to a bad two-three quarters, the stock corrected, became 50%.
Now, again, things are improving for them. You have seen investors, again, buying those stocks. In the last two-three days only the stock has moved a lot. So, you look for opportunities in these kind of companies which are down for a particular reason, which over the period will get resolved.
But you have seen companies like Suzlon or even companies like Idea where you have seen again and again, the money comes, gets burnt. They do not know what is happening for the future. So, I would rather stick to the other companies where I feel opportunities are better.
Let us quickly flash the names which you like with the disclosure why and one line on it.
Neeraj Dewan: Actually, I like Globus Spirits, it is one stock which I feel had two-three bad quarters but now the pressure on the raw material will ease with even ethanol, the capacity that they have, so this company I think can do well from these levels.
We have seen the consolidation, we have seen two-three quarters where they had those challenges as far as the raw materials are concerned.
And besides this, in the chemical space, there are companies which I feel have put in capacities and where they are putting in new capacities also.
So, a couple of those companies which I was seeing was one is Epigral and one is Yasho, where new capacities are coming in.
So, once they have the confidence of putting in new capacities, they have already come out, like Epigral has already come with capacity, will get utilised and Yasho is putting in new capacities. So, I think they over the next couple of years can give you decent returns from these levels also.
