“But, the whole consensus, if you look at, let us say, for example, a company like GAIL or Petronet, everybody has a sell call, but the company is delivering, ROE is at 20-22%, then at some point people will want to participate there,” says Hemang Jani, Independent Market Expert.

We were just debating earlier today whether OMCs are now getting priced to perfection and is there a valuation comfort there? What is your take?
In fact, this entire PSU rally that we have seen for almost now about six months or so, it has been quite surprising for a lot of us. Though we might feel that because of the sheer price move that has happened, all the valuations are looking stretched. But, if you look at, let us say, for example, OMCs that you talked about; HPCL, BPCL, IOC are quoting at somewhere around 1-1.2 price to book. This quarter numbers have been too good. But even if you were to take a slightly more realistic and sustainable kind of numbers one can look at a decent growth of 18-20% if the crude prices remain stable. So I do not think the valuations are out of whack. Yes, the prices have moved up. So the comfort in terms of putting incremental money may be a little less. But, the whole consensus, if you look at, let us say, for example, a company like GAIL or Petronet, everybody has a sell call, but the company is delivering, ROE is at 20-22%, then at some point people will want to participate there. So I am really positive. You might see near-term volatility. But I definitely think that some companies are still looking attractive. Did you manage to check out some of the numbers which are coming in from the companies such as Fusion Microfinance, or UGRO, the SME-oriented or the small finance bank, that universe. Do you like any name out there? Yesterday, Fusion has posted some 25% growth in earnings as well as profitability.
No, unfortunately, I have not looked at some of these smaller fintech companies. And as we all know, the entire space is buzzing a lot. And we have seen a big movement, whether it is Rel Jio or some of the other companies. But at this point of time, because of the uncertainty around the regulatory move and what implications it may have, not really looking at any specific recos at this point.

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Have you tracked Butterfly Gandhimathi or Crompton taking over? See what happened to Escorts, when Kubota took over, complete re-rating. But there were one or two quarters of kind of lull. So, Butterfly and Crompton taking over, any thoughts there? And how numbers will improve from here on?
I did not look at the company in detail but the entire brand, particularly in the south India that they have, somewhere because Crompton took over that company, there was a hope and expectation that you will be able to see some good numbers kicking in. Maybe it takes some time to bring about integration. But these numbers, if you look at the top line it was Rs 238 crore. I mean, significant drop. So, very hard to believe and these are not the things where you can say that because of integration, it is taking time or whatever but this is not something that is giving comfort. So, I will completely stay away at this point.

What are your thoughts on BSE?
What a spectacular story. People had kind of almost written off this company but I think the way they have bounced back. Also, if you look at their derivative performance, their market share continues to inch up. And more importantly, listen to the con call and the details which have emerged they are developing a co-location facility, which would have a major ramification because the entire algorithmic trading and the kind of work which is happening, they will be able to participate. Also, with the new MF platform and the data services, this is definitely looking like a big story in the making.

And because we do not have too many options when it comes to the capital marketplace, specifically the exchange, I think BSE would be a sole beneficiary of this entire growth and attention which is happening.

Is this the time for NBFCs? If indeed rates tip out by mid of this year and we head lower, it is the NBFCs which will benefit most. Which one would you play for?
I do agree that for NBFCs the current scenario is quite supportive and as you see some of these fintech companies, the wallet companies going through a bit of disruption, maybe part of that flow can also move to a far more solid NBFCs.

Within that what we like is surely Cholamandalam Finance has been our preferred pick, though it is a little expensive but from a stability and growth perspective, that is looking good.

IIFL Finance again is delivering very solid numbers consistently and there is a lot of comfort on the valuation front. So, definitely some of these companies we would go with and we do think that the overall weight of NBFCs in the index will do slightly better because of the incremental flows coming into from the SIP book and general HNI participation.

So, NBFCs is space is something that we would go with. Of course, some of the housing companies like LIC Housing, given the thrust in the budget and the kind of incentives which are there, so LIC Housing will be one stock that we prefer at this point of time.

Bharti Airtel, the way numbers have come out and the buzz for a possible tariff hike by mid of this year is getting louder, silent mover, crossed 1000, now 1100 plus, how do you look at Bharti now?
Very steady set of numbers, both in terms of India operations, the margins were slightly weak but better than consensus and what is very important to note is that of all the players which are there, let us say if you compare with Jio, of course, Vodafone, it would not be fair to compare but in terms of operating matrices Bharti scores ahead vis-à-vis Jio in a meaningful way.

Though their subscriber addition is not that good; ARPU, EBITDA margins they are doing much better. So, I think we do not have too many plays and Bharti will have to be a key allocation for majority of the investors and this year itself the telecom will be one of the best performing sectors in terms of growth and contribution to Nifty. So, surely, Bharti would be there as one of the core holdings.

Anything else you have on your own radar in your research which you are studying right now?
Varun Beverages, came out with very solid numbers in terms of revenue, volume growth, acquisition which they are looking to do in Africa. Maybe a little bit of concern on the debt side, but this is like something very clean and very high conviction kind of a story that one can really look at. So, definitely, we would be looking at some of the pharma companies where the traction is looking good both in terms of largecaps and some of the midcap companies. MNC companies are delivering good performance, whether it is Abbott, Glaxo, some of the midcap pharma companies. So, pharma would be one sector where you would have a positive view given the enhanced visibility coming from US and domestic market.

What exactly is your take right now on what to do with Paytm? I mean, is it just a clear avoid and for those who are in the stock right now should they be booking out?
So, stock has corrected 40%. A lot of uncertainty. So, for those who are bravehearts, in fact, unfortunately, this time around the way the circuit filters work many investors could not even get an exit which is quite painful. So, I would think that it would be good to stay away if you have a small exposure. Anyway, you can just wait for some time as there is more clarity to emerge.

But I am not buying into this whole thing that maybe Jio will buy out Paytm wallet or some other guys. I think those are just speculative stories. We should wait for some more clarity to emerge from the Paytm management on what exactly they are planning to do, that would give far more comfort to investors, but nothing you can do at this point.

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