Putting the short-term view like you said behind us, what should be the ideal portfolio construct right now, what should be the sectoral or a market cap flavour that one’s portfolio should have if you are looking at the next two to three years.
Vikas Khemani: Look, again, you do not change every day your portfolio construct. I have said repeatedly India remains one of the most promising market around the globe and your portfolio should reflect that 5-10-year view rather than short-term view and we do not make any tactical assumptions. So, from that standpoint of view, banking, financial services of course continue to remain very large exposure for us specifically in the current context where the interest rates are coming down.
So, last six-eight months we have been very-very bullish. Secondly, manufacturing is something which is a very-very big trend which is going to be here for some time, a lot of opportunities are coming about. Within that of course, there are a lot of intermittent trends because manufacturing is a very wide subject between speciality chemicals to auto components to pharmaceuticals to footwear manufacturing, garment manufacturing, EMS, defence, capital goods. It is very wide. So, you can play within those things, but generally speaking the tailwind is in the favour and we think recently chemicals are coming back in an interesting spot.
We have been owning a lot of CDMO. So, the manufacturing as a basket is a very-very promising basket, I would say, to remain there. And the third bucket where generally speaking a little less choices are available but still you do have choices available which is in the consumption basket across the board and you would to look at between discretionary and non-discretionary. So, if you allocate your capital around these three broad buckets, of course, sectorally is only one part, you have to identify right set of companies, I think you should be by and large coming out well in this journey.
But you mentioned chemicals, so on that note, I want to also ask you about some other crude sensitives, the likes of your refiners or your OMCs, other than that aviation stocks, tyres, paints. Since you have mentioned chemical, would this spike up in crude and the following dip in some of these sectors make these sectors attractive to buy now for the long term?
Vikas Khemani: Look, again, this is not the first time we have seen crude price going up and down. So, because of this short-term movement if you get a company which you like at a retractive valuation, surely there is a case to be looked at and that again varies between company to company. It is very difficult to call out a particular sector because within the sector also companies have different sensitivities and hence one has to be very careful about looking some of these things, but yes, every time crude price spikes up and there is a worry about margin squeeze and all from short-term perspective, they always have tend to kind of done well. For example, I think Pidilite whenever oil price goes up, stock comes down, but those are generally good opportunities, like this every stock has its own nuances and one has to kind of know a lot more detail around each of them. Give us some more sense on what exactly are you liking within the auto ancillary pack because the most that we hear is on the export opportunity that lies ahead for these companies and also some companies are transitioning into some of the other segments like aero defence. So, any particular segment of liking within auto ancillary or do you like some of these diversified plays?
Vikas Khemani: Look, again, auto ancillary is a very common this thing and I can only say the basket, but each company has a very different business model that one has to study. I mean, we own few names like Endurance, ASK Auto which we like because in general we are positive on the auto anc space, but in particular we have studied those individual companies and we find risk-reward in place.
So, according to me, it is about understanding those spaces, companies which have not much skewed exposure towards only ice. So, you should take into account when you look at a company that what is the exposure towards the transitioning, what is the exposure towards the the market, what is exposure towards import versus export. So, all those things have to be taken into account and each of the segment also has their own margin profile and capital intensity. All of them have to be kind of looked at before investing.
