SIP numbers are once again at an all-time high, but there is no excitement among market participants. How do you read it? Also, does the excitement seem to be over when it comes to this number you get every month?
Sandip Sabharwal: Yes, because these numbers are not surprising. Therefore, the inflow is between Rs 35,000 crore and Rs 40,000 crore. The good news is that even though people haven’t been making money for the past six to seven months, we haven’t seen any tapering. Because people have been doing well for the last five to seven years. So this trend will continue for at least a little while longer. And if at some stage you get to a point where people start making negative year-over-year returns, you could see some pullback at that point. Stock worship is established across the board. There may be some ups and downs, but this regular flow should continue. This is unlikely to generate any excitement as foreign investors are the sellers and there are a number of corporate IPOs as well as QIPs. In other words, since IPOs have taken away a lot of money and foreign investors have become the main sellers, the inflows into the secondary market on a net basis are not that large, so they are taking away the influence on the secondary market.
What do you think about this backlash in FMCG names? Because, as evidenced by the Q3 update, we don’t see a significant recovery. Another point these brokerages are making is that given the slowdown in growth in the first two quarters, the foundation-building process is just around the corner, and some of these brokerages are also is bullish on some of the stocks. Budget is one of the key triggers for expected consumption increases. We’ll have to see what the numbers are. What do you think about the FMCG basket?
Mr. Sandip Sabharwal: Setting aside the Budget, we set zero expectations for consumer recovery because, remember, consumer demand grew last year after almost a year and a half, two years of sluggish growth. That meant he was supposed to recover. But that didn’t happen.
While some companies’ performance improved slightly last quarter, overall demand on the consumer side of FMCG has slowed. Given the fact that agricultural incomes are likely to recover after two years of slow growth, an urban renaissance could occur, and potentially a revival in output as inflation is absorbed. may be seen. Therefore, there should definitely be some kind of resurgence in 2025. Most of these stocks are down nearly 25-35% from their highs after rising to highs 4-5 months ago. Typically, when quality consumer names fix an odd 30% from the top, they become a compelling purchase. Even assuming it returns to the same level in two years, that in itself is about a 20% CAGR. Ideal for FMCG counters of major brands.
Stocks such as Escort are doing well. On Thursday, we were talking to an expert who was very bullish about the tractor space. Apart from that, when it comes to GDP estimation data, the agricultural sector is expected to do well and the numbers suggest that. Do you also like tractors as a hobby in the automotive field at the moment? Or do you have any other favorite segments?
Sandip Sabharwal: Mahindra & Mahindra in its last conference call said that after almost two years of subdued growth, there doesn’t seem to be strong traction on the tractor side. So the whole tractor should be fine once the cycle starts. It should work for at least a few years. M&M continues to do well in the SUV segment, and if tractors are added to the mix, it could gain even more momentum. M&M has long been a top holding in our automotive division.
Bajaj Auto is a recent buy after a 30% correction from the upside as all the negatives are included in the price. Their exports are doing better than domestic sales. The recent depreciation of the rupee is likely to support export profits as well as the overall export business. Rising farm income coupled with a strong wedding season could also boost two-wheeler sales. So as a value choice, it seems interesting to me.
Some of the arbitrary names in these cities that I am talking about are Kalyan Jewelers, Blue Star. Lately they have downgraded some. Although Kalyan Jewelers has reported decent numbers, it is not appreciated by the public. Is urban consumption slowing down, even for luxury goods?
Sandip Sabharwal: It was a K-shaped economy where some segments were doing well and some segments were not doing well. Many of these companies that are adjusting their stock prices may have nothing to do with fundamentals per se, but only with valuations. For example, Kalyan Jewelers is trading at an odd multiple of 90 earnings even after this adjustment. This is a very high and unsustainable valuation. So the declines in many of the stocks you’re talking about are likely due to valuations being affected by overall market sentiment, rather than the actual performance of these companies. Masu.
