“In case of Jio platforms, you already have the rollout of JioFiber for home as well as for enterprise and those numbers are expected to have some kind of reflection into the books of the company,” says Deven Choksey, MD, DRChoksey FinServ Pvt. Ltd.

Let us discuss Reliance. The fact that, I do not know after how many years it is a first that they are declaring their numbers on Monday and very wisely coinciding with Elon Musk’s visit as well, seems like some announcement could well be in the offing. What are you anticipating from the earnings though?
Well, I think this quarter earnings, probably a few things one will have to look at. The consumer facing businesses, Jio and the retail, they have actually on a month-on-month basis reported significantly better numbers as far as their respective areas of activity is concern. In case of Jio platforms, you already have the rollout of JioFiber for home as well as for enterprise and those numbers are expected to have some kind of reflection into the books of the company.

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At the same time, more than 45 crores mobile subscribers consuming higher number of data is giving a better amount of level on the numbers. As I see it, I think the company has already established Rs 120,000 crore worth of revenue book and around Rs 60,000 crore worth of EBITDA book on a yearly basis which is growing at 20% rate of growth, which is likely to continue for new financial year, which is 24-25 as well, so that is one key thing that we will be watching out for.

In case of retail business too, I think 19% kind of a growth or 20% kind of a growth is being seen and most importantly the contribution to the margin is coming largely from the own brands, which are basically contributing significantly particularly into physical stores.

So, both these areas, the Jio platform as well as Jio Reliance Retail, both these areas probably suggest that consumer facing businesses are going to have robust quarter.

On the other side, the oil and gas business, the refining business, speciality chemical business, they continue to have a higher amount of traction largely because of the growth in the economy at the same time and they have been successful in making the better amount of numbers on the operating side, which we believe I think should get validated with the results coming out, so this industrial product business also remains distinctly strong and you are right, maybe on Monday we are expected to see some kind of positive investment coming in from the company on a variety of fronts be it the news pertaining to the demerger for Jio platform, Reliance Retail or for that matter I think interesting news coming up also on the front of Tesla, which you just mentioned, such kind of announcement are distinctly possible. So, let us wait and see, I think from the announcement point of view as well.

It is April and we are talking about Mumbai temperatures rising to 38-39 degrees, which means we are in for a tough summer. How can one really bet on this entire hot summer theme 2024? Buy air conditioners, buy beverage companies, buy both? What is the best way?
I guess the white goods companies particularly are likely to show the relatively stronger performance, be it the case of Voltas or for that matter Havells or for that matter Blue Star. I think these companies are showing distinctly high amount of growth as you also get confirmation from likes of Vijay Sales, Kohinoor. I think these kind of retailers are also confirming, including I think Reliance Digital if you hit the shop, they will probably confirm the amount of uptick that they are seeing in these areas in these products.

So, certainly, the business condition is remaining extremely robust and strong. With the amount of money which is available in the hands of individual consumers, I think the spending is also on rise. Coming to the stocks and the price and the valuations, I believe that the momentum is continuing with the better numbers in this quarter.

Next three months I think are likely to be extremely strong months for these companies. Most of it should have been priced by now, into the stock price and I see many of the companies’ counters have actually shown the valuation already on a fair value side.

So, maybe momentum continues, the valuation could possibly stretch a little bit further, but that is the nature of the game.

You have a stronger quarter in the form of a great summer out here, so you are likely to see a better amount of revenue and profit number from these companies.

Let us also get in a take then as to what the outlook is from you within the entire QSR space. Given the fact that we are looking at a bit of a weak Q4 playing out this time around, there could be a delayed recovery. How are you looking at the listed players?
Well, I think for a long period of time, we have always believed one thing, that these companies have fantastic amount of business proposition, the moat remains absolutely strong. However, our markets have ran up much in advance and the valuation of the stocks in the listed space, they are not cheap.

So, unless market gives some meaningful correction and when I say meaningful correction, unless I see headroom for 15% to 20% kind of an appreciation, probably I think buying in the momentum is not something which I am very comfortable with.

I believe that most of these companies have a bigger picture to offer going forward as well. So, corrections in the price is something which I would look out for before buying into the space.

Just curious to get in your take, given that we are looking at a pretty strong GDP growth, the fact that we are seeing the elections upcoming, macros compared to the rest of the globe seem to be better placed. How are you looking at sectors like railways, defence, infrastructure taking this forward and in light of that which are the stocks that appeal to you?
I think most of the companies within the respective sectors, particularly capital goods space, engineering, designing space, all these companies are reasonably priced given the kind of expectation of growth.

Railways in particular, remains extremely strong proposition along with defence for sure. The government of the country is definitely delivering significantly large amount of orders for the companies so be it likes of ABB, Siemens, or for that matter I think any of the EMS companies which are B2B supplier to the railway segment, I think they are the players who should be watched out for.

The likes of ABB, Siemens, they are always quoting at a premium, they are right now also quoting at a premium, but those who are taking the bet for next five years and above, they may probably buy in some amount of corrections in the market if the market gives one, so that is where probably I think one could go for buying rational in this kind of a market where the valuations are already fairly priced or premium valuations in some cases.

The EMS companies, they remain relatively a stronger bet, likes of DCX Systems in particular, where we believe that the new product and productions that they are having could possibly have relatively a stronger amount of traction going forward from this business.

Similar are the opportunities in different other companies as well. So, in my viewpoint, this segment remains extremely strong, buying probably is a challenge given the kind of valuation which I think most of these companies are quoting, but the market is expected to give some correction in between which is what we believe is the right time to buy into and major correction is ruled out. So, 15-20% kind of headroom on the price expectation would be the right time to buy into these stocks.

Devan bhai ab agla bata do.
That is a good one. Well, I think the amount of opportunity that we are seeing in the near term, maybe near term is about five years from now, is Jio Financial. Basically, I think that this particular company has a good amount of story to talk about. It is a core investment company. It is basically investing into NBFC business. It is investing to asset management business. It is investing into wealth management brokerage business and the insurance business coming up next.

So, in respective businesses in which they are investing, they are creating significantly large amount of value proposition. If one looks at the potential and the possibility in each of the four verticals in which they are operating, I would like to believe that these verticals are going to unfold and unfold big time.

Their larger amount of thrust is going to be on two counts. On one side, they have the balance sheet, which is an absolute requirement in this kind of business.

On the other side, they have got the customers, which is again, I think a very significant kind of a moat because generally you do not get customers so easily.

Being a core investment company, I think they get that particular advantage of credit information about those customers into the books.

So, from that perspective, it is going to be a real disruptor and the value proposition which has been built in this could be really-really big.

Whenever it unfolds, I am not expecting it to happen in six months or nine months’ time, but whenever it starts unfolding, probably I feel that it is going to be a huge value creator. I would not be surprised if a Rs 300 kind of a stock is basically going to somewhere around 1500 in the next three to five years’ time, so that is one area where probably I remain extremely convinced about from the investment perspective.

Which is a good idea which you would recommend our viewers that they should go and buy today, does not matter where Nifty is, does not matter where crude is, you think that money will be made in next two-three years and it could give a double digit return.
We broadly discussed about Jio Fin and I believe that the market is giving some kind of correction which I believe it will. So, I think anything which is 5-10% lower than the current market price could be a good buy opportunity in Jio Fin as of now.

What is the outlook when it comes to the entire auto space that you track quite closely.
I am remaining extremely bullish and convinced about the prospects going forward for autos, largely because of the fact that on one side the commercial vehicle where we remain fully convinced about buying into this opportunity. The fact that the infrastructure story and the industrial activity is getting unfolded and a scrappage policy is also into force, we believe that the commercial vehicle is probably into the sweet spot at this point of time and going forward in next three to five years I think this is one space where you are likely to see the sustained momentum continuing for the growth purpose on a month-on-month basis as well.

On the other side, I think the two-wheelers particularly the way the shift is taking place into the electric two-wheelers, I believe that the likes of Bajaj Auto could possibly be showing relatively more amount of strength because of the range of vehicles that they are bringing up including in the LPG segment of motorcycles.

I believe that this one company should be watched out for. It has got a lot of head room to talk about. The passenger vehicle segment business of Tata Motors remains relatively a more convincing story comparatively and if Tesla kind of association results into some kind of a venture together it could be a really meaningful story to talk about as far as Tata Motors is concerned.

So, these are a few companies within the auto space where we believe that the opportunity could be good. But most importantly some of the auto ancillary companies could do their bit and if they start producing better performance, most of the ancillary companies which have geared up to supply the assembly to the OEMs they are actually relatively better placed.


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