All the concerns which existed or coexisted couple of weeks ago they are getting addressed. Where will markets go now? Markets have climbed the wall of worry. Will they continue to ride the ray of hope now?
Hemang Jani: The market by and large has remained resilient despite such a big geopolitical risk and the fact that even before the strike happened particularly the Nifty movement was quite stable and we saw a lot of resilience.
The broader market had its own sort of corrective phase, but I do think that given the fact that this event has happened and though it is an evolving situation there is a possibility that you may see a bit of a cool off and that may give a lot of comfort to investors.
The fact that earning season is underway has not been that great, but we have to be mindful of the fact that the expectations also were low. The derivative position is on a lighter side because of the event risk.
So, overall, I do not see a reason for the market to correct in a big way. I do think that this is the time where you just have to wait out for a good opportunity whenever you see small correction in the stocks which have corrected a lot and where you have a slightly better understanding of the business and the earnings are okay.
Slowly buying those names could be a good strategy to have. I do not think the market is in a mood to give a deeper correction unless you have a really surprise move on the geopolitical front. Anything interesting on the FTA front which looks good to you?
Hemang Jani: Some of the spirit companies, particularly United Spirits should be well placed. I think the current duty structure is not that favourable to import the marquee brands that they have globally. So, I definitely think that there will be a certain amount of zing that will come into that stock because of the way the deal has been signed and I do think that overall even without the treaty the business was quite stable.
You had about 7%, 8%, 9% kind of volume growth, stable margin. So, if we have any incremental positives because of the treaty being signed, surely that would be one space to look out for. Textile, yesterday we had seen a broad-based rally but as you rightly pointed out some of the companies that are actually exporting to UK or some other markets because it is not just the UK treaty, but you may have a treaty being signed with US and depending upon how things unfold you might see some action.
So, KPR Mills and some of the textile companies Himatsingka, Gokaldas we had exceptionally high volumes yesterday, so I do think that some of these companies would stand to benefit because the size of the opportunity for textile would be very-very large.
So, Gokaldas, KPR Mills, ICIL, Welspun Living these are some of the names that I would surely look out for in terms of playing this treaty event.
What is your own assessment on how one should look at the likes of a United Spirits or a Radico now?
Hemang Jani: Overall, the space has been quite stable. It is one of the few pockets which has remained resilient right through this last six to eight months where the market itself was going through a bit of a corrective phase or we had a long grind.
So, fundamentally something like United Spirits, even United Breweries that reported the numbers on the volume and the margin front there was a bit of a positive surprise, also the fact that some of the state policies in terms of the levies there is a bit of a favourable development for the spirit companies.
So, I do think that United Spirits, United Breweries are the ones that would be in a much better position because you will see incremental volume growth and high margin products could get imported and that would surely give you a positive surprise in terms of earnings.
Wanted to have your take on Titan because I believe that this stock reacted already when we have the Q4 updates coming in from this particular counter, but given the earning season what is your expectation from Titan and how do you see the stock moving because the stock has been a little volatile in the recent while and in the past couple of weeks it is just correcting.
Hemang Jani: Despite steady performances from Titan for last two or three quarters, somehow the stock has actually underperformed the market as well as some of the smaller players did much better, something like a Kalyan and Senco and all for a point of time. So, I do think that purely from earing’s perspective and the way the company is positioned being a largecap marquee player, the valuations look good given the growth potential. But what is happening is that the gold prices continue to remain much at an elevated level and that would surely be a factor that investors would have in mind in terms of the growth that the company can deliver.
Also, I think this lab-grown diamond part, there is a certain amount of impact though people are not talking about it much, but I do feel that there is going to be some disruption for the jewellery players who have a larger component of the diamond business in the overall scheme of things. So, I do think that if Titan continues to grow at 16-18% with 10-11% kind of a margin, I definitely think that it would be a good allocation stock to have in the portfolio.
