Home News D-St’s knee-jerk reaction to virus is buying opportunity: Pandey

D-St’s knee-jerk reaction to virus is buying opportunity: Pandey


Yesterday, we managed to escape the fall but today is two and also the headline number is the same–another cut for the Dow. Do you believe the bulls now is going to need to resign and they will need to submit to the ugly reality?This kind of a response is on expected lines given the simple fact that the global expansion is at risk because of issue. As a result of that, discretionary spending internationally could come down, which will have pressure on commodities such as primitive and metals. But for us, this is not that negative with primitive being tender and prone to remain soft. So, I feel any sort of a reaction is going to be bought into. The issue is that, at the national market, when you look at all of your excellent stocks that are great, we have not seen that sort of a crack. Hopefully, now, if we receive a crack, names that are great or these good titles should be a buying opportunity. Our perception is that, even for a number of the segments such as, state consumer durables, in which there’s some element of import, there that the Q4 is not going to get impacted. I think Q1 is going to be impacted only if we see particular deficit of raw material; therefore probably, only digit expansion or double digit expansion, which we’re anticipating might come down by 3-4percent and that again is the extreme situation because our sense is that in case the businesses can airlift some of the parts and are able to pass on that additional price, even that influence won’t be there. So any sort of a response, that which we will see now or some days should be a buying opportunity. With March coming in, ideally if the temperature rises, probably this issue also could get contained; so from that perspective, overall we do not find this as a enormous negative for Indian markets given the simple fact that while the earnings are lopsided mainly driven by banks, even the liquidity continues to remain great and is likely to remain good for the remainder of the year.What are your ideas on cement for a package and on India Cements at particular?So general, concrete for a segment should select up mostly. Within the road players therefore, we would expect the purchasing and tendering to pick up. I think of that will be real stocks, that the associate beneficiary. But in cement, I think India Cement has got a single digit ROE; therefore out of a balance sheet perspective, it is quite heavy. Thus, we have not been pursuing that inventory. Our preferred picks are tier-I names such as Ramco Cement or UltraTech Cement or a number of the regional titles such as JK Cement or JK Lakshmi. I think that is where we have observed a improvement concerning overall margins. Plus, I believe that is where we’d want to chase. India Cement, historically, has not done well over cycles and which is where I believe that the challenge remains for the inventory; therefore we won’t be pursuing India Cement to get sure.There must be worth which you would love to connect with Tata Motors. It is not a company which could be squared off as a zero company. It’s a Tata Group company; they’ve JLR, they’ve India’s biggest CV company market share of the passenger automobile business. Markets are literally treating it as though it’s a franchise that doesn’t have any value.The only issue in Tata Motors is that they have got a fantastic exposure in China and internationally also if you look at the entire auto industry, it’s in worry given the simple fact that there’s a technological disruption happening and something such as Tesla has been sort of winning. The sort of capex which is demanded for Tata Motors is high. They have not been able to discover a partner, up till now and I think coronavirus will have an effect. Domestically, I think they’ve been doing fine concerning the launches, especially on the PV side. However, I believe that the CV business is not seeing any indications, if you move by the commentary of Ashok Leyland. So, I think what they’re anticipating is probably in H2 or that you might observe some bit of the uptick. Even Ashok Leyland would be a larger beneficiary. I think the challenges remain and that issue has been added to by coronavirus. What we like is something like Hero Motocorp that’s trading at roughly 11 times. Great products that were decent have been displayed by them on the premium side; therefore is a hope that probably stocks such as these could do but overall automobile for a package, we’re quite negative on the entire package. And now Maruti is a sell based on us and we’ve got a target cost of approximately Rs5,850.

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