Timt to guess on FMCG mid & smallcaps: Anshul Saigal

Posted On Apr 22, 2021 By admin With Comments Off

If one can find the claim mentions in that space, with a one-two time age horizon, 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 trend came strengthened by the fact that some of the banks were able to access the capital business 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 side than the PSU side. Likewise one cannot overlook the fact that the consumers want to go to more credible actors for their banking requirements, in this case the private banks. All the conditions seem to suggest that the trend of market share incomes is going to continue and there are 4-5 vast 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 banking pie in “the two countries “. So good-for-nothing seems to suggest that private sector banks will see a rate hump. On FMCG theme and midcap playersWe have seen that over the last two to three years, the FMCG space and the uptake seat in general has been less correlated to financial pleasure. We have find outperformance in this space compared to the rest of the markets. The outperformance had become so striking that many of these FMCG firms were transactions at unsustainable valuation differentials and that intended either FMCG valuations would need to correct or the rest of the market would need to see an expansion in valuations to catch up. Over the past six strange months, FMCG firms has already been underperformed the broader marketplaces. The valuation spread is constricting 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 was still tailwinds and to a certain extent animal intents have come out as people are going out and spending and the sensibility is improving. All these things are leading to volume growth in the mid and smallcap cavity. If one can find the title names in that space, with a one-two time season range, there is definitely money to be made in FMCG space. On whether BPCL and BEML are worthy of long-term investment or transactions wagers on disinvestment newsAnshul Saigal: Both these companies are business with different transactions embedded in one company. For example, BEML has a metro business, a defense business and certain other businesses. BPCL has an oil marketing business, a refining business and it has oil and gas wells for distillation. These are very different customs, 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 line of business. These companies 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 fronts of enterprises and have that risk profile added to their portfolios. But these are still very valuable and immense assets. After disinvestment, countless PSU firms become much more efficient and much more client familiarized. Their jobs have grown manifold over the years, BSNL being a case in point. There may be value for tactical investors in these companies and the nature of these firms 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 rebirth — via cement and real estate properties majors or via ancillaries In the US and Canada, where there is a recovery in real estate, while real estate premiums had moved up marginally, the lumber premiums have double-dealing because unlike in India where we use concrete to build structures, in the US and Canada they use wood and log and those expenditures have roughly double-dealing. So clearly in the US, construct textiles are a great way to play the real estate improvement. Similarly, in India, home improvement and building information are a quite interesting method to play the real estate recovery. We are coming off roughly 6-7 years of amalgamation in real estate and conditions are such that fringe participates or weaker players are out of the market and the most powerful actors are becoming stronger. The market is consolidating in their advocate. In 2017, the scheduled participates 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 participates “whos doing” gratifying to organised real estate business are going to see market share advantages and this trend will strengthen going forward. Home improvement frisks — be it tiles, sanitaryware, faucets, plywood etc or constructing fabrics; plaster, sword — all stand to benefit from a real estate recovery. And so I would say that that could be a nice way to play a recuperation if one believes there is going to be a recovery then those would be a nice style to play the real estate recovery. On crude prices and intensity& oil marketing companiesAll commodity prices, including vitality prices are ascertaining an uptick and the outlook for these expenditures is that they can remain strong and see an uphill trajectory going forward. However, the free movement of persons in commodity prices as likewise force expenditures is only a fraction of the meridian that we appreciated in 2007 -0 8 and 12 -1 3 years have overstepped after that peak. We are still a fraction of those rates in terms of where stock costs are today. If stock prices continue this trend upwards, then we could continue to see an expansion in gross refining boundaries. We have seen ameliorated interest in energy and oil extraction corporations. Another interesting way to play this trend would be to bet on sugar now as with ethanol coalescing, sugar has become a play on energy. It becomes an interesting play as vigor prices become stronger going forward.