ET NowIn an interview with ET Now, Gul Tekchandani, Investment Advisor, shares his views on some sectors and some stocks. Excerpts:
ET Now: I want to get your thoughts on IT as a pack. While clearly the market trend does not seem to be favouring the pure defensives and IT being part of it, you are seeing high beta cyclicals really take centre stage, but then you have the IT companies coming quarter after quarter and talk about such strong growth projections.
As an investor, would it be prudent to stay put in IT if you are and if you do not have money to put into IT names, perhaps dips would be the correct opportunity then?
Gul Tekchandani: I would say that dips are the best opportunity to invest across the board in this market. But having said that, except for a few companies, I am not yet positive on Infosys, but others are a core holding in the portfolio just as banks. More private banks or public sector banks and metals and capital goods, all these are basically the core holdings, top holdings and FMCG I must not forget.
FMCG holdings, if you see everybody has cut it down to the bone now. So somewhere you will see an uptick. If numbers start showing up, stocks will start performing now and we think all expect the economic environment has to improve. So the consumption will improve.
Ultimately, these are all integral parts of your core portfolio. You change your allocation based on the volatility in the market and the future growth of the economic environment.
Now probably there is a larger bet which at least I have taken on the B group stocks which include probably some small caps and some midcaps also looking into the future and this market looks evenly poised to go forward.
I do not know about the next week and the next month, but if you see over the next six months to next 12 months, you are headed higher than lower. So I would use every correction to get into the market.
ET Now: Do you like any of these stories from the financial space at large?
Gul Tekchandani: I have some of the NBFCs and IDFC is there in my portfolio. So I quite like these stories and ultimately it has to kind of wind into infrastructure somewhere and thereby you have also effectively infrastructure stories.
I am not so negative on the so-called PFCs and RECs because this is temporary albeit and ultimately earnings will drive the numbers, the share price and these companies itself are in a good space in terms of power and things like that and it is an infrastructure and thereby these also are now providing an opportunity. There is a temporary blip down and this is a good opportunity to get into them.
ET Now: I want your view on two names which really sprung up in action and have seen a fair amount of build up. Crompton Greaves and MCX, do you like any of these stories?
Gul Tekchandani: Well, I had Crompton Greaves and I just sold out after this spike frankly. MCX is a takeover story and it is difficult. It is very-very volatile and I do not think I want to hold it till I know who is going to buy it. Just because of a few other people have got into it, it is not a reason that anybody else ought to chase the stock because you really do not know what the underlying business is all about, what are the liabilities which are going to come along with that business.
Hopefully, if some names, which are the good names, if it takes it over, then there can be a story going forward because if you remember, the public issue had been made at around 1300-1400, if my memory serves me right.
ET Now: I want to come to you on IT. You have told me you do not like Infosys. What about Wipro? Is that a case and a strong contender in particular?
Gul Tekchandani: All three are there in my portfolio. The top companies, which are effectively Tech Mahindra, then TCS and Wipro and a few smaller ones as well. So I have only moved out of Infosys. I was not convinced as to what was happening and now frankly, I wish them all the luck, but there is no promoter now which is inside the company and they are only holding shares from outside. So basically there is no meat in the game any more from any promoters.
I want to see how it phases out going forward and the current chief executive, I wish him luck, but he comes from a product company. So, hopefully if he turns around this business and he makes it into something which we will see over a few quarters, after that one can go back and look into it.
But people like it. So I will at least hold my real guard on that and wait and watch and see what is going to happen. But there are a lot of other businesses which one can invest in and particularly now with the markets doing what they are doing, there are so many small caps, midcaps which are going to give you solid money over the next few years.
ET Now: Would you like to give us any names then? Which are the small and midcaps which could make money for our viewers?
Gul Tekchandani: I have invested in Lumax Auto Technologies and I have picked up a small number of shares in Balaji Amines which is a small company trading at about 5 PE. This Lumax Auto ultimately is a reasonable group out of Delhi and is trading at about 8 PE or 7 PE. So there is an opportunity and ultimately now the B group, which used to train at a band of 5 to 8 PE, has now started trading in a band of 8 to 12 PEs.
So there is some money to be made there and both the groups are all right. They have in the past seen better prices on the stocks and nowadays you really do not price, find shares which are trading at any old prices any longer, including DCM Shriram I have picked up recently because everybody has been chasing seeds business and here is a company which a huge seed business upwards of 1000 crore, if my memory serves right, and it is trading at reasonable 7 PE or 6.5 PE because unfortunately it has some sugar business along with it.
So if you go dig deeper, you will see this seeds business, there is immense value here as well. So I have picked these three-four companies and am holding on, apart from the top line companies which remain in the portfolio.
ET Now: I want to get your thoughts on IT as a pack. While clearly the market trend does not seem to be favouring the pure defensives and IT being part of it, you are seeing high beta cyclicals really take centre stage, but then you have the IT companies coming quarter after quarter and talk about such strong growth projections.
As an investor, would it be prudent to stay put in IT if you are and if you do not have money to put into IT names, perhaps dips would be the correct opportunity then?
Gul Tekchandani: I would say that dips are the best opportunity to invest across the board in this market. But having said that, except for a few companies, I am not yet positive on Infosys, but others are a core holding in the portfolio just as banks. More private banks or public sector banks and metals and capital goods, all these are basically the core holdings, top holdings and FMCG I must not forget.
FMCG holdings, if you see everybody has cut it down to the bone now. So somewhere you will see an uptick. If numbers start showing up, stocks will start performing now and we think all expect the economic environment has to improve. So the consumption will improve.
Ultimately, these are all integral parts of your core portfolio. You change your allocation based on the volatility in the market and the future growth of the economic environment.
Now probably there is a larger bet which at least I have taken on the B group stocks which include probably some small caps and some midcaps also looking into the future and this market looks evenly poised to go forward.
I do not know about the next week and the next month, but if you see over the next six months to next 12 months, you are headed higher than lower. So I would use every correction to get into the market.
ET Now: Do you like any of these stories from the financial space at large?
Gul Tekchandani: I have some of the NBFCs and IDFC is there in my portfolio. So I quite like these stories and ultimately it has to kind of wind into infrastructure somewhere and thereby you have also effectively infrastructure stories.
I am not so negative on the so-called PFCs and RECs because this is temporary albeit and ultimately earnings will drive the numbers, the share price and these companies itself are in a good space in terms of power and things like that and it is an infrastructure and thereby these also are now providing an opportunity. There is a temporary blip down and this is a good opportunity to get into them.
ET Now: I want your view on two names which really sprung up in action and have seen a fair amount of build up. Crompton Greaves and MCX, do you like any of these stories?
Gul Tekchandani: Well, I had Crompton Greaves and I just sold out after this spike frankly. MCX is a takeover story and it is difficult. It is very-very volatile and I do not think I want to hold it till I know who is going to buy it. Just because of a few other people have got into it, it is not a reason that anybody else ought to chase the stock because you really do not know what the underlying business is all about, what are the liabilities which are going to come along with that business.
Hopefully, if some names, which are the good names, if it takes it over, then there can be a story going forward because if you remember, the public issue had been made at around 1300-1400, if my memory serves me right.
ET Now: I want to come to you on IT. You have told me you do not like Infosys. What about Wipro? Is that a case and a strong contender in particular?
Gul Tekchandani: All three are there in my portfolio. The top companies, which are effectively Tech Mahindra, then TCS and Wipro and a few smaller ones as well. So I have only moved out of Infosys. I was not convinced as to what was happening and now frankly, I wish them all the luck, but there is no promoter now which is inside the company and they are only holding shares from outside. So basically there is no meat in the game any more from any promoters.
I want to see how it phases out going forward and the current chief executive, I wish him luck, but he comes from a product company. So, hopefully if he turns around this business and he makes it into something which we will see over a few quarters, after that one can go back and look into it.
But people like it. So I will at least hold my real guard on that and wait and watch and see what is going to happen. But there are a lot of other businesses which one can invest in and particularly now with the markets doing what they are doing, there are so many small caps, midcaps which are going to give you solid money over the next few years.
ET Now: Would you like to give us any names then? Which are the small and midcaps which could make money for our viewers?
Gul Tekchandani: I have invested in Lumax Auto Technologies and I have picked up a small number of shares in Balaji Amines which is a small company trading at about 5 PE. This Lumax Auto ultimately is a reasonable group out of Delhi and is trading at about 8 PE or 7 PE. So there is an opportunity and ultimately now the B group, which used to train at a band of 5 to 8 PE, has now started trading in a band of 8 to 12 PEs.
So there is some money to be made there and both the groups are all right. They have in the past seen better prices on the stocks and nowadays you really do not price, find shares which are trading at any old prices any longer, including DCM Shriram I have picked up recently because everybody has been chasing seeds business and here is a company which a huge seed business upwards of 1000 crore, if my memory serves right, and it is trading at reasonable 7 PE or 6.5 PE because unfortunately it has some sugar business along with it.
So if you go dig deeper, you will see this seeds business, there is immense value here as well. So I have picked these three-four companies and am holding on, apart from the top line companies which remain in the portfolio.
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