And I believe now all eyes and all attention is shifted towards what will be the likelihood of the trade deal between India and the United States. We know that Piyush Goyal is in the United States for a four-day meeting and trying to carve out some trade deal with the United States. There are a lot of news or reports floating around what sort of a deal they could actually cut with the United States. But what is your take? Now, what are the markets waiting for? You think it is just a point of consolidation because too much has happened or too much has transpired in the last one month.
Sudip Bandyopadhyay: Oh, absolutely, right. More than the trade deal, of course, there are uncertainties and speculation around what the trade deal can or cannot do with bit of consolidation, profit booking, or bit of a risk aversion, whatever terminology we may choose, it is pretty much on the back of that.
Things have moved up quite a bit in the recent past over the last one week and a bit of profit booking, bit of caution was warranted and that is what pretty much we are getting kind of displayed today. Some amount of concern is building definitely around the trade deal and the 2nd June by when that 90-day period runs out is also around the corner.
So, there is a race against time to get the deals done and many countries are at it. So, we will have to wait and watch because US policymaking currently is inherently very volatile and we will have to be bracing for some amount of turbulence going ahead again. So, it is better to be bit cautious, better to be bit guarded as we approach 2nd June.
Also, want to get your sense on the top Nifty loser today and that is Eternal. It has been consolidating over the course of the day but now it is lower by 4%. Yesterday also the stock was cracking in trade, but today we have news flow that the board has received shareholder approval to cap the foreign holding at 49.5%. Remember almost a month ago when this announcement first came into the market when the shareholder approval was pending, this was seen in a very positive light and today when this approval has come in there has been a sharp cut on the stock of 4%. This also means that there could be a potential loss of flows coming in from global indices, for example the MSCI index. Help us understand why this divergence in terms of the stock move that we have seen for Eternal and what lies ahead fundamentally for the company.
Sudip Bandyopadhyay: Fundamentally, if you look at it, they are making a conscious call regarding how they want to run their business. They are keeping the foreign holding below 50%. They will be entitled to do lot many things which a foreign entity which is by definition companies having more than 50% foreign shareholding will not be allowed to do.
So, they have chosen that and they want to operate those dark stores. They want to have inventory with themselves which they want to sell directly.
So, these are the things which will probably give them benefit in the long run and their business structure fundamentally will be different from a Zepto or even a Swiggy and that is the distinction they are trying to draw.
Yes, it will definitely ensure that the flows do not come the way they will come into a Swiggy or a Zepto when it gets listed, but that a conscious call and it is a conscious call based on the model they are choosing to go ahead with.
So, I would not read too much into it. There are business models which are very solid and sound based in the parameters of a domestic company. Again, there are advantages of having foreign inflows into the company. So, we will have to see how things pan out, how they are able to scale up their business.
But as things stand today in front of Eternal, their quick commerce business is in the phase of scale up with intense competition and that is eating into the margins. Under these circumstances, they have very clearly said that the margins will be under pressure and market is cognisant of that.
So, I would not read too much into today’s this correction which is on the back of this fear that foreign inflows will come much lower in Eternal going forward. Yes, that is a fact, but I do not think that will prevent Eternal from performing either in the P&L sense or in the market sense.
