FMCG and diagnostic shares are safe stakes amid uncertainty in the market: Dipan Mehta

“We are not in the beautiful place until now where the assessments are delicious and not thinking about sharing and buying stocks, but it seems that we are getting there,” says Dipan Mehta, Director of Elixir Equitses.

It doesn’t look great, but it looks better than when we last talked. Did the storm came and went?
Dean Mihata: The thing on the market is that you know the storms, whether they came and went, and their bottoms have been created or created only after a few weeks. But I say that this budget is a step in the right direction in terms of the opposite of the slowdown that we see in the past two quarters or so. How many effects will be, only the time will say. Also, to a large extent LargeCAP shares reach reasonable evaluation. There is still a lot of evaluation in some MIDCAP pockets, but I think it will also be corrected over time. Therefore, we are not in the beautiful place until now where the assessments are delicious and it is not to think that we go and buy arrows, but it seems that we are getting there.

When we finally talked to you, I was completely down. It was your point of view that raises criticism, and sell, do not buy. Has your point of view change or still on the downward side?
Dean Mihata: I am still very careful and I do not want to give up money easily, and if there are opportunities to raise cash levels, especially companies where we are witnessing a great and slow evaluation of profits, this opportunity is also still continuing. It is just watching the market.

I think this budget was very good in our opinion. We did not expect and I think no one in the market expects to reach 12 income -exemption rupees, and this will throw some opportunities.

We are trying to evaluate the opportunities that are delivered. At the same time, we have seen a very deep correction in many capitalist goods companies, as there is still room for these profits to improve there but the assessments certainly may have a little correct there. Therefore, from the situation in which it was very expensive, very expensive, we reach a lot of normal assessments of many companies.
I saw you smiling when we were talking about dependence on Trenet. In which side of the camp are you?
Dean Mihata: No, we will not take a side here, both wonderful companies. But I do not think this is the reason for correcting Trent. What NIKUNJ said, it is costly, and we will definitely see a slowdown in profits, it is not sustainable, and the basic impact on the markets will definitely be turned on, high PE shares will be targeted for correction.

Many players who entered such stocks are looking for momentum to go out, so we see a correction. Dependence, it becomes more clear one day it will become more similar to a holding company and we do not prefer to buy holding companies.

When the public subscription comes in JIO or the public subscription comes with retail, that will be very exciting times for minority shareholders and this will be good opportunities for long -term investment. But at these levels of dependence, I do not see any big operator.
Whenever the public subscription comes, there will be some value, but we will see the deportation of shareholders from the holding company to the new listed entities.

This talk is that Capex has ended, consumption is the way forward, and the construction of India has ended, and the purchase of India is the new topic, do you agree with that?
Dean Mihata: Not real. See, what kind of market shaking is that the actual capital expenses of the government are not exciting. But it is not the money that plays here, it’s actual implementation. Even in this fiscal year, we were not able to achieve the goals of the government’s capital expenditures.

Therefore, from this point of view, more logical amounts were kept. If the type of implementation improves, then capital commodity manufacturing companies will continue to be in good condition, and the correction we saw, as I said earlier, is an interesting opportunity and many capital commodity companies may reach this fair value.

One thing we need to note is that many of them sit at a very good request book site, and also, many of them soon look there in particular given the vision of earning. By the way, if liquidity improved in the system, interest rates are reduced, then more capital expenses will be made and the government will definitely try to climb to it.

So, anything that seems interesting on Capex theme, which may have corrected a lot?
Dean Mihata: See, according to us, the first of the usual disclosure, we and our customers are invested, Larsen and Toubro rose with a very good set of numbers and a very strong request book site, which is a very diverse arrangement center, projects inside India, outside India, outside of which India as well It is the stocks that still show a kind of doubling of profits. And if you strip all sub -companies that will never be opened, the assessments are still reasonable.

I think AFCons is also interesting as a company to look at it and so on. I was very affected by KEC International, the numbers were impressive, and very powerful from the request book site.

I contribute like ABB and Siemens, which was expensive, they saw a great correction there and I think that given that it will always be expensive in terms of prices to multiple profits, at least this range that could have reached the bottom with profits growth, These companies will also start showing stock revenues in line with profits.

Well, consumption will be better, but diagnostic stocks rise after the budget, and this is very much?
Dean Mihata: Yes, you are right. But see, diagnostic shares that last two quarterly profits. Of course, the basic effect benefits from it and these are the shares in which the path of long -term growth is also very decent and the assessments have also appeared from what they were three years ago or so.

Investors are looking for safe stories to play on them. Now, FMCG is no longer a safe story from this point of view. Therefore, from consumption and from the safety point of view, the diagnostic stocks of these standards are suitable.

What is your point of view on food? I am purely talking about food. There is an intellectual school that says, well, these are good companies, but they are still expensive. There is one intellectual school that she says, look, they have corrected it for two or three years. It will not become cheap. They will never come to the PE double of 20, 30. So if you are waiting for these shares to reach your PE double, you can wait forever.
Dean Mihata: From the investor’s point of view, unless you are convinced that the upper line can grow by 15 % compound for three to five years, you should not look at these shares at all. From this point of view, the long -term growth rates for the entire FMCG manufacturer have reached dual -without numbers. The largest, is similar to 3 % to 4 % or so, smaller, 7-8 % or so, and this type of higher lines growth will not really make you in any significant performance or superior returns.

But these companies are great in terms of protecting Malik’s head. I agree that the PE complications are definitely not decreased from these levels because there is a lot of the loyalty of the shareholders, the low floating stocks as well, and some investors prefer the type of profits they get and bonuses from time to time. But there is no growth. These are fixed companies.

They are stagnant companies, and when you reach the stock market, you are looking for growth companies, you want to double your portfolio revenue by at least 15-16 % and I do not think that these companies can provide you with this type of long-term revenue, such as three to Five years or so.

What about another leg of consumption and hospitality? Where do you find that comfort to add it to jobs within the hotel space in particular?
Dean Mihata: The hotel certainly looks interesting as well. I know visually that the numbers were disappointing, but that is due to the loss and management of the huge Forex on this risk factor as well. If Rupee settles, you will see very good extract numbers from the indigo and its strategies in terms of expansion worldwide and also in terms of raising the value chain by providing a distinguished position, and it has also been well received. There is a lot of pricing power that has certainly returned to the entire flying industry and uniformity helps the indigo as well. Therefore, within the space of consumption, travel, tourism and hospitality is a type of new FMCG, if the new FMCG sectors that one can see. As a measure of disclosure, we are contributing to flying between the rouf, so our views can be so biased.