Have you bought into any of these new age tech companies?Paytm has fallen over 50% from its IPO price, Nykaa is another 10-20% odd or so down and similar is the price action across the pool. Does it make sense at all to have a very small holding in a bunch of these names clubbed together?
You are right. It makes sense to do it as a portfolio. It is logical to do it. I still believe that three to five years down the line, all these companies put together will be 30-40% of your portfolio and at the end of the day, the disruption and price discovery will come through.
I bought a very small amount in CarTrade because I liked the financials of the company at that point of time. Their loss was because of the stock option debits which happened. But I am buying some Fino Bank, but not recommending it.
But the fact remains that a lot of skulduggery is going on in the market in the private space. We saw what happened in BYJU’s. The promoter came and said the last holding I bought was at $22 billion and therefore would do an IPO at maybe $30 billion valuation. That is not what you want. It has now gone to the level of fine art, I would say a toxic art of valuation to get to the retail market and it is unhealthy as well as unethical. It is absolutely wrong.
Once one sees this happening in an industry, one should keep the firepower away and let it all play out. If BYJU’s has to do it then can you imagine what the rest of the companies are doing out there! Therefore I would say a small basket yes, but a lot of stuff has to play out in this market and one should let the private equity players get out first before entering these companies because they are getting out at our expense.
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Do not be a sucker like what happened in all these cases that one built out. The FIIs and private equity players are sitting with profits, retail investors are sitting on losses. That’s not a smart idea.
So, there is no need to hurry in this market. The Indian economy is not running away in a hurry. Markets are not running away; there will be time to buy. Six months down the line, there will still be better bargains. So nibble yes, but do not fill your stomach with these stocks.
What is your take on the reopen trade, you spoke of Jubilant Food but what about some of the other retail plays, restaurant plays, multiplexes? Are they on the radar now?
Well they have also recharged the share price. If you look at the multiplexes, the share price is almost touching Rs 1,700 for PVR. So it is not that they are now valued at the old primes. Now they are fully matured value stocks and when you play this opening trade which is correct, you will find that you are buying stocks at pretty decent prices. So be careful what you are buying, that there is nothing wrong in the stock. They will do well. India is starving at this point of time and there is a great pipeline of movies coming out. Avatar-2 is being released ad it is going to be the biggest blockbuster in December. So there’s nothing wrong.
I think that is a very good place to be. At least one is safe and there is demand for these products. But whether they get hit by the cost and the margin we do not know but opening trade is safe play, QSR is safe. QSR value wise is also good because they have corrected. Therefore multiplex, QSR companies, jewellery companies are all absolutely fine.
I am not sure whether people really understand but the economics of marriage in this country is so strong that everything hinges around it. I am not buying hotels as an opening up trade, let me be honest to you, I do not think they make any money for even the owners. How will they make money for shareholders? But all the things you said are good places to be, buy them. But some of the things have run up. So be careful.
Do you really think HDFC Bank has the potential to catch up to what ICICI Bank and SBI have done while HDFC Bank was busy underperforming?
They have the potential but they need to fix accountability for what transpired. Their head says RBI did a good thing by stopping us and that is an incredible statement! It tells you that the board of HDFC Bank, the CEO and then everybody down was going like a train without a thought about investing in infrastructure and control. That is not good for governance. So what was known for solid governance by their own admission said thank God, we were stopped! Or we would have had a train wreck on our hands. Now that is not good.
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I have full confidence in HDFC Bank as an institution but I think there are serious issues of governance overhang on this company that they need to clean up. They need to get hungrier, open, transparent people on the board of the company because both the twins are suffering from sheer fatigue. Their whole senior management sits on thousands of crores in cash stock options. I do not know what incentive they have to grow these companies at a faster pace, work 14 hours a day. They have not performed.
Therefore, while I have a strong basis on institutions, I have my doubts they will outperform unless something drastic is done. The statement which said that we were lucky, we were stopped kind of rings a warning bell. They should have clawed back stock options from the CEO and say you did not invest, you encashed the stock option, put the bank in trouble for one year and the shareholders are not going to get your last three years stock options, which never happened. I hope bigger changes will happen at the top.
Read More:HDFC Bank | New Age Stocks: Ajay Srivastava on what’s wrong with HDFC Bank and how to play safe in this market
2022-03-16 03:50:00
