“It has been what one-and-a-half years since the rural markets have turned down, recent reports which are coming out also are pointing towards slowdown on the FMCG side,” says Dinshaw Irani, CEO, Helios Mutual Fund.

Yesterday Britannia numbers came out, barely any revenue growth but the commentary continues to remain cautious. But a week back both Dabur and Godrej came out with very good commentary. Stocks ran as much as 10% that day saying that they are early green shoots. Because you guys analyse consumer stocks a whole lot, what are your thoughts there. Do they deserve a closer look now?
The fact is that they are two different segments altogether. You are talking about FMCG and mind you, I mean if you talk about Dabur, it is more of a rural heavy kind of a portfolio and more of a health oriented portfolio and I would say it is more towards discretionary rather than pure FMCG as such. I mean discretionary as in you are talking about health which can be a impulse purchase or whatever. So, I do not think those segments are doing badly. It is mainly the pure FMCGs which are doing badly basically because as you rightly pointed out, there are still green shoots. I mean it has been what one-and-a-half years since the rural markets have turned down, recent reports which are coming out also are pointing towards slowdown on the FMCG side.

So, it is obvious that there is a lot caution in the air today. There have been a few callouts but I think it is mainly pockets driven rather than across the board as such.

I feel that the constraint that RBI has put on liquidity that is also running a problem in the markets per se and you can see that in terms of expenditures and stuff like that.

Talking about FMCG right now, they have not been pointing to a very buoyant market within FMCG or that space as such. So, I leave it here.

Let us get in your take then as to how you are reading into the overall performance of the entire PSU space. The darling of the year gone by and as things have started to the beginning of this year, it looks like it is only going to continue, lot of reinforcement as well coming in from the government. Do you believe that for those who have missed the bus on some of those PSU names within the defence, railway space in particular that maybe it is a bit late now to get in?
The fact is that about a year-and-a-half back, we would have been also of the same opinion that these PSUs are not worthy of second look. But actually, the present government made the PSU 2.0. But the fact is that they are very proactive towards these companies. I think they have realised that market cap is the way to go and not to appease short-term political needs from these.

So, our belief today is, in fact in our top 10 holdings you will probably see four or five PSUs within our portfolio as such, so we are also very keen and in fact when you mentioned that is it looking too late, obviously there will be volatility given the fact that some of the stocks have run up too sharply, especially in the railway space. But I think there may be opportunities coming back at some later stage but within the defence space I do not believe it is a problem at all.

We are talking about a structural growth story out here and especially the fact with these stocks becoming basis of outsourcing. But one caveat out here is that most of the plays within defence are service focussed.

Those are more of a cyclical play as such, you get one day order and their capacity so you need to be service agnostic companies which we should focus at and there are fairly I think a limited amount which are there available in the market.

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