To begin with, Paytm that stock is up 14%, what explains that and would you be a buyer at 750 thereabouts?
Rajat Sharma: This is one stock that I have consistently been recommending since it fell the way it had fallen and my reason has been that look it has an amazing brand value, it has an absolutely unmatchable reach in terms of the number of vendors who use Paytm. It has got a first mover, widest network. Sooner or later it will either be merging or be taken over by some other company. What is going on right now, I really cannot say because the ban which they saw in February this year where Payments Bank was taken away from them, quite frankly there is a lot of other companies who follow the same practice. So, really, there is obviously more than what meets the eye, but fundamentally when you look at their accounts, they have a very clearly established business. We have given a very, very detailed research on this on our website.
It is there for anyone to see who wants to search Paytm, Sana Securities. It is a very detailed research. I like this stock. I have liked it at 300, 400, 500 and even at this price, something obviously is going on in this stock which quite frankly the honest answer from my side is I really do not know what that is, but I like the stock fundamentally. They have got a very, very well established business within the payment space.
You would not share the same optimism about Ola Electric, would you?
Rajat Sharma: No, absolutely not. I tweeted when the company was coming up with an IPO, I said three things, all of which have happened, which is something I shared over my Twitter yesterday that on listing, it will go up by a lot, but that is not anything to do with fundamentals of Ola, which are fairly weak, it is a loss making company. But purely because there is an absolute IPO frenzy and it would have been a good opportunity for anyone who got this stock to sell while they could.
Right now, I think it is trading between 90-95, I am not really sure of the exact price, but I would not be surprised if it comes back to its price band of 70-76 and falls even lower. We have seen this happen in past and yes, I think I would not recommend anyone buying this stock even at that price to be honest.
What is the view on this one, Hyundai or Swiggy, which one would you prefer or is it going to be both?
Rajat Sharma: No, no, without a doubt, Hyundai, without any doubt. Hyundai, which is a big player, is now getting listed. So, some money may actually flow out from some of these stocks and go into the new entrant to the passenger vehicle segment.
I like Hyundai as a stock. Their cars are doing very well. They are not really leaders. Maruti Suzuki is the leader. But they have got a better product line, I do believe, and it is coming at fairly attractive valuations. You have Hyundai, Maruti, M&M and Tata Motors which is actually larger than M&M in terms of market share, I think it is 14% or so which is just as much as Hyundai is.
So, I think that bit of the pie for listed players will expand. Between the two, I would like to recommend and even try to buy Hyundai post listing. I do not really invest in IPOs, it is a big waste of time. But Hyundai, if you get it at a good price, it is something you should buy and hold in your portfolio. This is a sector which should do really, really well going forward. So, yes, and Swiggy, I am really not sure even with Zomato, if with all these businesses, Blinkit and everything else that they are doing.
First of all, Swiggy is a second mover, Zomato has taken away whatever they could. I do not know, it may be some kind of anchoring bias, anyways I always order from Zomato, wherever I am, Delhi, Goa, Bombay which is the cities where I visit the most and not really used Swiggy. I will be disingenuous for me to talk about Swiggy and its valuations honestly.
Which are the sectors apart from the ones that we discussed that are looking good to you or anything else that you have added fresh in the portfolio?
Rajat Sharma: Yes, so two sectors which I really like at this point, one is FMCG, which is pure FMCG. In fact, very interesting thing that right now when you talk of consumption, even when I was looking at the fact sheets of lot of consumption funds, they have a lot of names which are consumption like Bharti Airtel and even HDFC Bank, it is consumption banking.
But I am talking pure FMCG like ITC, HUL, Asian Paints, Britannia, Nestle, the bread and butter companies, that is one segment which has not done much for a while now and that is where we are initiating some buy.
Two stocks that I have added recently to my portfolio. Actually, I did talk about it on your show last week as well or the week before last week when I was there is Asian Paints and HUL and my rationale was that Asian Paints has actually in terms of valuation fallen from 100 plus price earnings to about a little below 60 now.
So, earnings have kept improving, stock prices not kept going higher in line with its earnings, so that is one stock that we have added. Hindustan Unilever, again, stock has done nothing, earnings are consistently improving. So, this is one sector which I like and these are the two stocks which we have added.
Well actually, there is two places where we have made some buying. Private banking also, again, it is a perfect classical case of what Ben and Graham kind of old authors would describe in their security analysis that sectors which are facing problems, industry specific, otherwise, there is no problem with the business, they are not getting deposits because a lot of money keeps getting invested in mutual funds and debt funds and balanced advantage category.
So, there is a mismatch between deposit and advances with banks. Sooner or later, this should clear out. So, you had an HDFC Bank, which used to trade at multiples of 28 plus, today it is trading at multiples of 18 and there are no buyers. So, it is a very boring stock for many people right now, but it will catch up, so that is another sector that we have looked at adding, again only private banking. And the third space is technology.
You have Infosys and Mphasis, which are now paying dividends close to about 2%. And look, because of the whole artificial intelligence boom in the US and Indian companies being traditional legacy old models of doing business were sort of out of flavour. So, largecap information technology companies is something that we have added. Infosys and Mphasis are two stocks which we have added in, not all but multiple portfolios for clients.
But talking about Asian Paints, there were these reports doing round that, of course, AkzoNobel global parent is looking at some sort of restructuring of their business back home and Asian Paints could be a likely contender. The earlier name that was being circulated was Birla Opus as well. Would you have a view there as to whether it is a good asset, whether it will be positive for Asian Paints if it buys it? What kind of consolidation are you expecting here?
Rajat Sharma: I have not looked at that. But I think in both spaces, paints and cement, there is a lot of consolidation that is happening because there is a lot of capacity right now and everybody has more than enough demand and more than enough business to cater into. If any consolidation happens, then Asian Paints being the market leader would obviously benefit from that.