What is the strategy in the market for both long as well as the short-term players?
Daljeet Kohli: I think we are taking this as a positive for the market, mainly because this was required. A lot of froth was getting built up at various points and certain stocks where for last many days, in fact for last one-and-a-half months or so, we would have met at least 20-30 companies and everywhere you like the model, but the problem is the valuation. The price itself has gone much ahead of the fundamental. Some places even two-three years hence whatever is the earning coming that has been discounted at present only. So, even though you like the company, even though you like the business model, it becomes uninvestable.
Now, in that situation, I think it is but natural that a market will realise this kind of anomaly and there will be some reasons, it can be any factor which will come in and then that froth will go away. So, to that extent I think this was expected, this is good for the market in the longer run, maybe some more froth needs to get out in certain other pockets.
Good part is that in terms of our portfolio, we were already positioned towards things which were at reasonable valuation. So, we have avoided PSUs, railways, defence, those kind of stocks. We do not own in our portfolio for quite some time now. So, I think to that extent we are safe. And the pockets where the valuations are reasonable, they still continue. So, I do not think there is any change in the fundamentals for those, for example, pharma or agrochemicals, all consumption theme, on-ground reality remains the same. So, it is just that the technical factors which are playing at this point of time and one should be able to utilise those factors in your advantage.
Wanted your sense regarding a couple of these so-called new-age tech companies and I am talking about Ola, Paytm, Zomato of the world. You have on one hand, the Ola founder engaging in a war of words over the social media platforms while on the other, you had Deepinder Goyal making deliveries with his colleagues as well. What within some of these names would you like to bet on?
Daljeet Kohli: So, as a disclosure, as of now, we do not own any of these names. But I think some of these guys have started showing some path to profitability. Market was under a lot of stress earlier because there was no clarity on when will they reach that profitable growth. So, growth and addressable market we all know that is a very well documented thing now. Everybody understands, yes, there is a lot of potential. But unless you make money, the minority shareholder do not get anything. Now, I think some of these companies have started showing that they are cognisant of this requirement and they have started taking some action on that. Maybe some more time one needs to give. Within this space, I think the fintech guys, especially the ones which are more inclined towards insurance, etc, we tend to prefer them versus the other ones. But as of now, we are still in the evaluation stage. We are not holding any of these stocks.
Whenever the market does recover from this and the liquidity does settle with China, which are the pockets you do not think will come back to their heydays? Any sectors which you would say avoid right now because they have seen their best already?
Daljeet Kohli: So, all the sectors that last one-and-a-half, two years, they were in the vogue. We talked about like PSUs in general, maybe the stocks in defence sector, stocks in shipping kind of companies, those kind of companies I think I do not expect those prices, that peak prices will come back in next many years maybe. Not that these companies are bad and not that they will not perform. Financials will come better.
But problem is that you have already paid them so much. So, if you have already given the valuation which it deserves two years or three years hence, then there is only one way, which is the time correction. So, you have to hold it and wait for that time period.
I think those are the sectors, capital goods, some of the companies, although we are very positive on power and that related space, renewable space, but you have to find stocks within that space which are not that kind of obscenely priced.
Taking a manufacturing company, whether it is in power space or whatever, at 80 times multiple, 100 times multiple, I do not think that will give you any good alpha returns. So those pockets, I think will not come for a very long time at the same PE prices.