Have you looked at these luggage stocks, Safari and VIP? There is a very interesting story that the founder of Safari used to work in VIP and look at the value he created! Today big upgrades are coming in. Have you looked at these luggage stocks?
Sandip Sabharwal: Yes, I completely missed the Safari story and to that extent, I think they have done extraordinarily well. Post-COVID, I was bullish on the entire reopening trade, so we thought that VIP could do better. It did not. Now, at these valuations, Safari is priced for perfection in the near term, but if it continues to do well, the stock could do well.
VIP, on the other hand, could be a potential turnaround candidate. It is one of the stocks that we hold that has not performed and I would think that at these prices, it offers value and for people who want to wait, they could wait out the results, see if there are signs of turnaround, and then look at buying.
What is the trade now from here till the rest of the year? If you do not invest, that is a trade. The fact that you raise cash is also a trade. The fact that you do not sell anything, is also a trade.
Sandip Sabharwal: Fresh cash deployment should be done carefully. For people who have participated in the market, you have made so much money and stocks have gone up so much. Many stocks have gone up 10-20 times, so there is nothing like missing the bus or losing out in the markets. You think that the markets look expensive. There could be potential corrections somewhere down the line, I do not think that in the next couple of months. we should see any big correction but subsequently we could. In that scenario, you have to wait. There could be certain jerks that could create corrections and buy on those days at those prices, but not continuously keep on buying stocks that are moving up every day. Although people are warning about PSUs, valuations have become an old thing that people keep on warning about but they kept on going up. IREDA is at 10 times price to book. Even Bajaj Finance in its heydays did not trade at such a high valuation. So, valuations matter in the long run.
Just your thoughts on the recent news with the hike in the platform fee and the way Zomato has moved, do you track it?
Sandip Sabharwal: What is happening is that the duopoly is getting entrenched and till another contender is trying to disrupt the market, Swiggy and Zomato are in a duopoly where now they are focusing on profitability. So, typically in these cycles, we will see that results could surprise on the positive side and that is what is driving the stock price higher.
For people who are holding, there is no reason to sell though I would not be a buyer at this price.
Do you think Paytm could be a contra bet? On Friday, there was a disclosure that Akash Bhansali has also bought 1.2% stake. The current market cap of Paytm is about Rs 20,000 crore. I am purely going by the fact that you are getting the entire Paytm and some cash would be there.
Sandip Sabharwal: Yes, I always found the Paytm business model unsustainable. What they were doing was easily replicable, and the entire profit growth over the last five-six quarters was coming through the loan origination, which they were doing and commission they were earning. So, I do not think that it is something that one would like to hold for the long term. Whether it could bounce from extremely oversold levels in a significant bull market, anything is possible. But I would not like to buy it because I do not know what is going to happen.