What have you used the recent correction to buy?
We have increased our bank exposure. We are very bullish on BFSI as a space over the next 24 months as growth is underway, asset quality issues are lagging and marginally rising interest rates are helping the banking sector. We are quite optimistic about the banking sector as a sector. So we increased our portfolios there. We’ve added a few names where we can see not only earnings growth, but valuations repricing over the next two to three years.
We have also added automobiles that we believe come out of a low base. There is a lot of pent-up demand and the shortage of tokens will soothe our opinion over the next three to six months. The growth profile for this whole sector has been very lackluster over the last three or four years. Nothing happened and therefore this sector can somehow do well. These are the two new shifts that we have made in our portfolio. Otherwise, overall it should stay the same.
Also read: I see a kind of mini-IT trend in manufacturing over the next 5-7 years
What are you doing with the supposedly newly listed universe? They have completed a year and the blocking period is ending?
I’m sure a lot of people struggle with this. In my opinion, most new technology companies do not have a business model or the business model because they are considered duopoly or without competition is not. They themselves face disruptions from many other sides.
“ Back to recommendation stories
Second, even the corrected valuation may not be close to a meaningful opportunity. , for example, is the biggest player in the country. He can no longer raise prices. They charge almost 25% and despite that if at this type of penetration if you can’t make money then when will you make money? The question is, how do you value a business? Whether you are a monopoly or a duopoly, at some point you should be making money. So there is no visibility on when the business model will become profitable. The thing is, you have to understand that after so many years in the business, when they have a big market share and there’s still no earnings visibility, how do you rate these companies?
So the foam was there as well as FOMO (fear of running out). But that has faded, I maintain that many of the companies that have gone public, over the next five years, many of them may not even be listed. We have seen this cycle many times in the past. We continue to evaluate, it’s not that we are blind to new opportunities.
Disruption is here to stay, but in the name of disruption you can’t buy anything or pay anything and that’s precisely what was happening. People who didn’t understand business models were also buying without understanding price. People bought Paytm for 3000 PE in the private market before it went public. It was clearly a sign of FOMO. These excesses have been corrected, but we still don’t think many companies are still in the value zone, where it can be said with confidence that it will now create wealth over the next three to five years.
Second, once momentum is lost, it takes a very, very long time and a lot of business reimagining to regain momentum. All of these businesses are on the decline. The appeal has disappeared in these companies. They have to come back with different proposals or different growth profiles so that we look at them differently. I think it’s in a while.