Dalelorenzo's GDI Blog
27Mar/210

Timt to bet on FMCG mid & smallcaps: Anshul Saigal

If one can find the freedom appoints in that space, with a one-two year occasion range, there is definitely money to be made in FMCG space, says Anshul Saigal, Portfolio Manager& Head-PMS, Kotak Mahindra AMC.On privates versus PSU banksThe trend vis-a-vis the large cap private banks and the PSU banks has been laid out over many years and conditions have not changed for this trend to change. It looks like the trend of some market share gains by private sector companies banks is going to continue in the future -- foreseeable as well as distant. The veer came strengthened by the fact that some of the banks were able to access the capital sells and conjure uppercase and strengthen their balance sheets which allows them to gain market share even faster going forward. Clearly those banks were more on the private area than the PSU side. Also one cannot overlook the fact that the consumers want to go to more credible actors for their bank requirements, in this case the private banks. All the conditions seem to suggest that the trend of market share amplifications is going to continue and there are 4-5 sizable private sector companies banks and there is a lot of market share to be taken. If the banking pie is worth Rs 100, then Rs 70 goes to PSUs, about Rs 10 -1 2 to NBFCs and the rest goes to private sector banks. Even though the private sector banks have outperformed in recent times, but clearly their share is very small in the context of the overall bank tart in its own country. So nothing would seem to indicate that private sector banks will see a hasten protrusion. On FMCG theme and midcap playersWe have seen that over the last 2 to three years, the FMCG space and the consumption cavity in general has been less correlated to financial act. We have visualized outperformance in this space compared to the rest of the markets. The outperformance has now become so austere that many of these FMCG fellowships were transactions at unsustainable valuation differentials and that required either FMCG valuations would need to correct or the rest of the market would need to see an expansion in valuations to catch up. In the past six odd months, FMCG companionships has already been underperformed the broader markets. The valuation spread is tightening and the rest of the market is outperforming the FMCG space though there is always scope to make money if you are a stock picker. In the mid and smallcap space, even in the FMCG segment there are opportunities to make money. There are tailwinds and to a certain extent animal forces have come out as beings are going out and spending and the sentimentality is improving. All these things are leading to volume growth in the mid and smallcap seat. If one can find the freedom specifies in that space, with a one-two year age scope, there is definitely money to be made in FMCG space. On whether BPCL and BEML are worthy of long-term investment or transactions pots on disinvestment newsAnshul Saigal: Both these companies are corporations with different ventures embedded in one company. For instance, BEML has a metro business, a excuse business and certain other industries. BPCL has an oil marketing business, a refining the enterprises and it has oil and gas wells for extraction. These are very different jobs, all embedded into a company. Someone coming to buy these companies will have to keep in mind that they are buying a conglomerate rather than a standalone business with a single cable of business. These corporations would have been of greater value had they been split and sold differently because people would have had the opportunity to get into the different indications of enterprises and have that risk profile added to their portfolios. But these are still very valuable and enormous assets. After disinvestment, numerous PSU companionships become much more efficient and much more client oriented. Their industries have grown manifold over the years, BSNL being a case in point. There may be value for strategic investors in these companies and the nature of these professions may be very different formerly this divestment plays out. So tactical investors may find value in both the stocks in the short term as also in the long term.On how to play the real estate and residence expect resurgence -- via plaster and real estate majors or via ancillaries In the US and Canada, where there is a recovery in real estate properties, while real estate rates had moved up marginally, the log costs have double-faced because unlike in India where we use concrete to build constructs, in the US and Canada they use wood and log and those prices have virtually double-dealing. So clearly in the US, construct information are a great behavior to play the real estate recovery. Similarly, in India, residence improvement and building substances are a very interesting method to play the real estate recovery. We are coming off virtually 6-7 years of consolidation in real estate and conditions are such that fringe players or weaker musicians are out of the market and the stronger actors are becoming stronger. The busines is consolidating in their spare. In 2017, the listed players had about 6-7% of market share in the Indian real estate space. That market share in three to four years, has gone up to 22%. This tells us that these companies are becoming stronger and too that organised actors "whos doing" gratifying to organised real estate firms are going to see market share incomes and this trend will strengthen going forward. Home improvement frisks -- be it tiles, sanitaryware, faucets, plywood etc or improving fabrics; plaster, steel -- all stand to benefit from a real estate recovery. And so I would say that that could be a nice way to play a recovery if one believes there is going to be a recovery then those would be a neat space to play the real estate improvement. On crude prices and power& oil marketing companiesAll commodity expenditures, including exertion rates are appreciating an uptick and the outlook for these expenditures is that they can remain strong and picture an upward path move forward. However, the free movement of persons in stock tolls as too exertion prices is only a fraction of the flower that we learnt in 2007 -0 8 and 12 -1 3 years have transferred after that peak. We are still a fraction of those tolls in terms of where commodity expenditures are today. If merchandise tolls continue this trend upwards, then we could continue to see an expansion in gross refining perimeters. We have realise deepened interest in energy and petroleum extraction companionships. Another interesting way to play this trend would be to bet on sugar now as with ethanol mixing, carbohydrate has become a play on energy. It becomes an interesting play as vigor prices become stronger going forward.

Read more: economictimes.indiatimes.com

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