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00:00We are being joined by Sharmila Joshi from sharmilajoshi.com on this edition of Hot Money.
00:09Sharmila, I'll come to you on this one. The stock is up around 4% as we speak. Your views on
00:14Glenmark? Yes, I think the news is certainly good. As we've just been hearing, apart from
00:20the numbers being good, I think what has been particularly taken note of and which is heartening
00:24is the way the European business has done and the kind of growth that is anticipated there.
00:30And there seems to be a sense that there is a sort of a business turnaround because of the refocus
00:35that they've brought into their various verticals. So given that, I think this would be a stock that
00:41I would continue to be positive on. I think the only sort of negative that I would point out here
00:46is that what we've really seen is or what we've been witnessing is that pharma as a sector has
00:51been doing reasonably well these last five, six months. So there is always that
01:00feeling that if things were, if they didn't deliver the way market is expecting them to,
01:04because now everything has gotten sort of priced to perfection. So if the good results don't
01:10continue, then you could see a correction. But I think for Glenmark, given its valuation and given
01:14this kind of news, this would be a stock that I would continue to be positive on.
01:18Sharmila, come in on this one. Your view on this particular financial company, what's the way
01:23forward? So I would actually largely concur with what I've been hearing. This is a company I've
01:28liked for the longest time. And I think in terms of numbers, they were good. But you know, I think
01:34what you really need to keep sort of at the back of your mind is that when you enter a stock like
01:38this, my request would be to do it for the long term because there is a story that is being played
01:43out here. Maybe every quarter you may not see the kind of numbers that you have seen this quarter
01:48because at the end of the day, the vertical that you're focused on, whether it is vehicles or
01:53whatever kind of loans, if that doesn't perform that well, you could see it in your numbers.
01:59But overall, their strategy and the way they've been growing is something that I
02:03like. And I think among the NBFCs, this would be sort of in my top list of stocks that I like. So
02:10from a longer term perspective, it's a great stock to have in your portfolio.
02:15All right. Well, it's a good stock to own if you have a long term perspective, and I'm sure a lot
02:21on the street will agree with that as well. But we move on to the Adani Group companies. And this
02:26time around, on a portfolio basis, we've had an update when it comes to its operational performance
02:30for the quarter gone by. So what we have is an EBITDA growth of around 33 percent on a year
02:36on year basis for the Adani Group companies coming at around 22,570 EUR. And consequently,
02:44your adjusted net profit rose by as much as 50 percent on a year on year basis at a little less
02:51than 10,300 odd crores. Now, perhaps more importantly, at this point in time, we are
02:57looking at the net debt to EBITDA, which comes in at around 2.2 percent. This is something
03:03Chairman Gautam Adani had also mentioned a few weeks ago. And well, it's very much on track.
03:10Remember that this is also at a multi-year low. It has come up substantially on a year on year
03:15basis from over levels of around 2.5 percent and around there and well over that, in fact.
03:21What's really contributed to this overall business on a portfolio level is the new businesses
03:27where your EBITDA has risen a whopping 70 percent, 70 percent year on year at a little less than
03:343,000 crores. And your quarter EBITDA has largely come from your core infrastructure business,
03:42which accounted for nearly 86 percent of your total EBITDA. And it is essentially your core
03:49infrastructure business that continues to drive the Adani Group on a group level, of course,
03:56on a consolidated level, consolidated basis. And your trailing 12-month EBITDA also rose
04:01by around 45 percent. So a lot of positives, you know, on a group level. But, you know,
04:08Shamila, if I can take this one up with you in terms of companies that you find interesting in
04:13this group, anything that you would even place a bet on even at these levels at the moment?
04:20So I think first off, really a great set of numbers and, you know, the data that you were
04:26sharing, I mean, it's really when you really analyze it and that you see that the growth is
04:32coming from really the verticals which are expected to do well even going forward. You know,
04:37you're talking about infrastructure, you're talking about green energy. So, you know,
04:41these are all the ports and the Adani ports. So I think, you know, when you talk of
04:48ports infrastructure or any that sort of infrastructure, I think we would all largely
04:54agree that we have a long way to go over there. And, you know, precisely, I think those would be
04:57the stocks that I would like. You know, I think that perhaps Adani Enterprise itself is a stock
05:02that you can look at. And I think maybe then I would pick an Adani port. So very clearly, Adani
05:08Green could be another. But, you know, I'm not talking about that because of evaluations and
05:12the fact that you really, I think, need to give that business a little more time. But having said
05:18that, the fact that this growth is coming from these sectors is very heartening. And these could
05:24be some of the stocks that I like. Tamila, come in on this because the street is mixed. And while
05:31we congenitally see strength in Zomato, you know, there is one pocket on the markets which suggests
05:37that this is extremely expensive. We know that. But that's also because it's very recently turned
05:41profitable. And if you take the price to earnings ratio as a valuation metric, of course, it's going
05:46to look expensive. However, on the other hand, you also have plenty of analysts which suggest
05:51that, you know, look at the growth down the line, considering it has made, you know, this acquisition
05:56blanket and it's actually going to change things around, turn things around for Zomato.
06:01Which side of the equation do you stand here, Sharmila? And what would you do with Zomato?
06:06I just feel that it's a discovered story. I completely agree with everything that is there
06:10in the note. But I'm just saying that how can you keep reacting to the same news, you know,
06:15every four months because this blanket has a success and the fact that they've turned profitable
06:19and that they've gone up from, you know, whatever beaten down levels that they were at. I feel that
06:25a lot of it is already, market has discovered this as a story and is there in the price.
06:29So while I do think that there is an upside in the stock price, I mean, possibly there could be if
06:36they continue to deliver the kind of numbers that they do. I think that the shift that happened in
06:40our perception of Zomato, that to my mind has already happened. So I'm only circumspect because
06:47of that and the valuations really more than anything because this is not something, as I said,
06:52this is a story now that the market has sort of discovered and accounted for.
06:56All right. The key word there is discovered. That is the big takeaway as far as Sharmila's
07:03concern on Zomato. While it does have a positive bend, but it also does seem like a lot of positive
07:11factors have already been priced in. But it doesn't mean that there won't be a further upside.
07:16It's just that there could potentially be a limited upside from current market levels.
07:21But the final stock on our radar is Trent, then. And well, this one again is one of those companies
07:28which just moves from strength to strength. The reason why I wanted to address Trent is that,
07:32you know, it's trading at valuations about 130 times, well, one year forward.
07:39And it seems like nothing's stopping Trent from moving even higher. At some point in time,
07:46the question really is that when do you decide that, well, you see potential consolidation
07:52coming in? Because about three months ago, at maybe 30 percent discount, even a 40 percent discount,
08:00Trent was still ridiculously expensive. And, you know, if you consider an 80 percent growth in its
08:07EPS on a year-on-year basis, that means that you would want to half your 140 times on Trent
08:14to around 70 times. And even 70 times one year forward seems just a tad bit pricey.
08:22Now, that's just Trent. Now, you know, I'm sure that all those who are invested in Trent
08:27are also aware that this is not anything new when it comes to Trent in terms of its valuations,
08:32because it's always and always has been richly valued. In fact, oftentimes than not, it usually
08:40tends to be valued at a price-to-earnings ratio of around 80, 90 times. But the question is that
08:46at what point in time can things get at very, very heady levels? So, Sharmila, I guess I'm not going
08:52to ask you whether or not Trent actually makes for a good investment bet at this point in time.
08:58Just want your view. And at what point in time can we find sanity in stocks like this in general?
09:04You know, you'll be hard-pressed to find sanity in the market as a whole. But, you know, jokes aside,
09:09I think that, you know, what really I sort of find intriguing and because this is a sort of
09:16a trend that I'm seeing across that, you know, their whole Zundio model, because, you know, I
09:21think that there, as I said, I'm seeing this trend, sort of a trend where a lot of brands are
09:26launching slightly cheaper products, which they say will appeal to a younger generation,
09:32which typically would want to spend lesser, but where the churn would be higher. And I think even
09:36if you see in terms of Zundio, their stores are growing at a faster clip than, you know, Westside
09:42stores. And a lot of Zundio, if you look at it as a model, a lot of the stores are sort of on
09:48outskirts of cities and, you know, slightly larger stores. And as I'm saying, at a very,
09:53at much lower prices than what Westside stores are. So are we missing something here? You know,
09:59I think is that the reason why market is giving it this kind of valuation? Because as we all
10:04discussed, and you know, I completely agree with you, there is really, it is an expensive stock
10:10at this price. It's a very good stock. It definitely deserves a premium valuation.
10:15Having said all that, the valuation seems too high. So maybe, you know, I think that,
10:21that and the Star Bazaar, maybe market is sensing some sort of growth there. Star Bazaar again,
10:26I think, you know, is an established model. There is again, nothing new there. But Zundio,
10:30I mean, is that what people are factoring in that maybe we are, is there something there that
10:35we haven't understood completely? Because a lot of brands are doing this. A lot of brands are
10:40introducing sort of cheaper brands, which they say will appeal to a younger generation.
10:47So maybe that's an untapped market which we are, which Trent has tapped on.
10:52All right. Okay. Okay, fair enough, Sharmila. Point taken. And of course,
10:56a lot will be a lot more clearer down the line. I reckon, you know, even a small correction can,
11:02you know, bring normalization to a lot of these expensive stocks. And that doesn't mean that
11:07Trent is not going to be expensive in those circumstances. Just suggesting this as to what's
11:13happened in the past. But from there on, we move on to another very interesting sector.
11:18And that's the jewelry sector. And this Morgan, we have, this morning, we have a JP Morgan note,
11:23which suggests that Q2 appears to have taken off very well after what was a relatively subdued
11:30Q1. Because, you know, the wedding season in Q1 was a little bit more extended and it actually
11:35went through, you know, spilled over in the second quarter as well. Now, there is the other
11:41aspect of gold demand, because that has actually also seen a rise with the sharp cut in customs
11:46duty in the union budget that just went away, went by a few weeks ago. It does seem like,
11:53based on JP Morgan, that there is a reinvigorated footfall in, you know, among a lot of these
12:01retail majors that would include something like a Senko or a Kalyan Jewelers and, of course,
12:07notwithstanding Titan, where there is pent up demand and they also see potential bringing
12:14forward of the upcoming wedding season that usually happens in November, December. And
12:20more importantly, the pace of new store ads remains steady to aggressive, which means that
12:27a lot of these companies continue to invest in the anticipation that sales will continue to be
12:32strong. We've already had an idea about the kind of sales that we've seen, specifically in, you
12:38know, relatively smaller names like Senko and Kalyan Jewelers. As far as JP Morgan is concerned,
12:44they have Titan under their coverage with a neutral stance and, you know, a price target
12:51there on their forward, about 3,450 odd levels. That's what the price target. So it's exactly
12:58where it is right now. Shamila, your stance on the jewelry segment and if there are any
13:03potential opportunities at this point in time? So, you know, I really don't think that Indians
13:10as a whole ever really stop buying jewelry or gold. So I don't understand this reinvigorated
13:17and that kind of thing, because I don't know when people actually ever really stop buying gold.
13:22On the negative side, I think, you know, the wedding season is supposed to be a shorter one
13:25this time. So there are a whole host of stocks that I like there. And I think that Senko,
13:30of course, Titan, Kalyan Jewelers, and I think that the custom duty cut is adding to a little
13:38attraction towards gold. And also, I think the fact that, you know, what I mentioned earlier,
13:42I think even gold jewelry brands, especially people like Titan, etc., are introducing more
13:48variable 18 carat, 14 carat kind of jewelry, which is more affordable and which younger people can
13:53buy. So you see that trend there as well. So having said that, I'm not really sure when I've
14:02ever really been negative on jewelry as a business in the Indian context. I think even during COVID,
14:08people still continue to, you know, when they save money on the wedding and they
14:12put all that money in gold. So I think in our kind of a scenario, it remains one of those sectors
14:19which will be like a steady performer. All right, there you have it. Well,
14:23that's the view on the jewelry segment. On that note, Sharmila, thanking you for joining us and
14:29taking us through your views on the various stocks and sectors that we wanted to address
14:33in the show today. And that is all that we have on this edition of Hot Money. Lots more lined up
14:38on the other side. Keep watching NDTV Profit.