- #Sensex, #Nifty off day's lows
- #LTIMindtree & #AartiIndustries in focus
Get all your stock-related queries answered by our technical and fundamental guests with Alex Mathew and Smriti Chaudhary on 'Ask Profit'. #NDTVProfitLive
- #LTIMindtree & #AartiIndustries in focus
Get all your stock-related queries answered by our technical and fundamental guests with Alex Mathew and Smriti Chaudhary on 'Ask Profit'. #NDTVProfitLive
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00:02:14 - Good morning and thanks so much for joining in.
00:02:24 You're watching Ask Profit on NDTV Profit.
00:02:26 My name is Alex Mathieu and with me is Smriti Chaudhary.
00:02:28 We'll take you through the next half an hour of trade also.
00:02:31 Now we'll look at the benchmark indices.
00:02:33 We've come off quite substantially
00:02:35 from the low point of the day,
00:02:36 but there's one stock that continues to trade lower,
00:02:39 and that is LTI Mindtree.
00:02:41 It has posted a disappointing set of Q2 numbers.
00:02:45 We're joined by Avinash Gorakshakar
00:02:47 of ProfitMart Securities,
00:02:48 as well as Rahul Sharma of Equity99.
00:02:51 Gentlemen, thank you so much for taking the time
00:02:53 and speaking to us on NDTV Profit.
00:02:55 The objective of the show, of course,
00:02:56 is to answer all of your stock-related questions.
00:02:59 But before we do that,
00:03:00 we'll focus on a couple of these stocks.
00:03:02 So first, LTI Mindtree.
00:03:05 I'll come to you first, Avinash, on this one.
00:03:07 10% down today, quite a disappointment.
00:03:10 The markets have not seemed to like the numbers at all.
00:03:12 What did you make of it?
00:03:13 And what should investors that are holding this do?
00:03:16 Is there an opportunity, according to you,
00:03:18 to accumulate after the dust settles?
00:03:22 - I think, Alex, first of all, good morning.
00:03:25 And I think as far as LTI Mindtree is concerned,
00:03:29 I think numbers were quite disappointing,
00:03:30 both on the revenue as well as on the margin front.
00:03:34 And I think clearly, I think in terms of the growth,
00:03:37 on a sequential basis,
00:03:39 the performance was more or less flat on the revenue side.
00:03:41 On the margin side also,
00:03:43 I would believe that if one were to look at it,
00:03:45 I think it would now take at least a couple of quarters
00:03:47 before we could see some meaningful recovery.
00:03:49 So I think investors who are holding the stock
00:03:52 can continue to hold.
00:03:54 It's a decent kind of corporate
00:03:56 with a very good order book,
00:03:58 but I think execution is going to be the key element.
00:04:01 I would not suggest fresh buying even at these levels,
00:04:03 unless and until we get more clarity on the growth quotient,
00:04:07 which is going to happen over the next couple of quarters.
00:04:10 So I think investors need to take
00:04:11 a slightly longer term call.
00:04:13 Those who have invested should at least look at
00:04:14 the next 12 to 15 months for a meaningful recovery.
00:04:17 I think fresh buying,
00:04:18 I would believe that even at these levels,
00:04:20 valuations appear to be fair to expensive.
00:04:23 So I would prefer to wait for some more time.
00:04:25 And obviously, once the March quarter is out,
00:04:28 at that point of time, we could take a fresh review.
00:04:30 But as of now, it's a hold, no fresh buying recommended.
00:04:33 Right.
00:04:34 Good morning, Avinash and Rahul.
00:04:36 And we have another stock in focus today,
00:04:38 which is Aarti Industries that was up
00:04:41 around 8% in the morning,
00:04:42 but has since made those gains and is up 5% in trade.
00:04:46 And that, I believe, is on the back of a contract win.
00:04:51 And we have Varsha joining us
00:04:53 to give us more details on that.
00:04:54 Varsha, what's driving the stock higher today?
00:04:56 So, Smriti, as you rightly said,
00:04:58 so company stock is over 5% today.
00:05:01 Now, if you see, this is on the back of,
00:05:03 company has secured four year supply contract
00:05:05 with multinational conglomerate.
00:05:07 Now this is to supply a niche specialty chemical,
00:05:10 and this deal will generate a revenue of almost 6,000 crores.
00:05:14 Also, the company has been supplying this chemical
00:05:17 for over past five years.
00:05:18 And this product is integral part
00:05:20 of a company's long-term growth strategy.
00:05:23 And volumes have seen a consistent increase
00:05:25 over the past four to five years.
00:05:26 And if you see the CAPEX plan for this product,
00:05:29 so the ongoing CAPEX program
00:05:31 will meet the contract requirements.
00:05:33 So no additional CAPEX will be needed for this one.
00:05:36 All right, thank you, Varsha, for that.
00:05:39 Avinash, your views on the stock,
00:05:41 it's up 5% in trade right now.
00:05:43 Would you suggest buying at these levels?
00:05:45 Yeah, I think from a longer-term perspective,
00:05:48 I think this is the second large order
00:05:50 which Aarti Industries has got.
00:05:51 Earlier, they had got a 3,000 crore order,
00:05:54 again, which was a long-term contract.
00:05:56 This is a 6,000 crore order.
00:05:57 So my sense is, definitely,
00:06:00 if you are looking at the revenue visibility side,
00:06:02 it gives a decent amount of comfort for the investor.
00:06:05 My sense is that if you have a 12 to 18 month
00:06:07 kind of timeframe,
00:06:09 it seems that chemical prices have stabilized.
00:06:11 I think in terms of margins also,
00:06:13 we could expect a decent improvement going forward.
00:06:15 So yes, from a longer-term perspective,
00:06:17 I think one can definitely look at accumulating the stock.
00:06:19 But in the near term, I would not expect any big upside,
00:06:22 considering the fact that these contracts,
00:06:25 the revenue flow has to yet begin.
00:06:27 And once they start,
00:06:28 then they would start contributing to the top line,
00:06:30 profitability, and the cash flow.
00:06:32 So I think longer term, yes,
00:06:33 if one were to look at 12, 18 months,
00:06:35 it's a decent bet in the current scenario,
00:06:37 but you need to have a longer timeframe
00:06:39 to get a decent risk reward.
00:06:40 All right, thanks, Avinash,
00:06:41 for that view on Aarti Industries.
00:06:44 Let's jump straight to the questions then,
00:06:45 and we've got quite a few coming in.
00:06:47 Just a quick reminder,
00:06:48 if you're tuning in right now,
00:06:49 you can send your questions to us
00:06:51 on any one of our social media platforms,
00:06:53 preferably on YouTube,
00:06:54 because we are tuning in on that as well,
00:06:57 and we are available on the chat function.
00:07:00 And on WhatsApp, you see the number on your screen,
00:07:02 you can send us a message on that number.
00:07:04 We've got several messages coming in already.
00:07:06 By the way, do tell us your name
00:07:08 as well as where you're tuning in from.
00:07:10 If you bought a stock, tell us what level you bought at.
00:07:12 So the first question we're taking is from Jayesh,
00:07:15 and Jayesh is asking about Jio Financial Services.
00:07:17 He is wondering whether to buy,
00:07:19 let's pull up the stock and see where it's currently trading.
00:07:21 He's wondering whether to buy at the current market price.
00:07:25 And the question really, Avinash,
00:07:27 and sorry, I will come to you on short-term queries, Rahul,
00:07:29 but it's seemingly the first few questions are all long-term.
00:07:32 Avinash, we don't yet know too much
00:07:35 about the business prospects.
00:07:36 Of course, some details were made available
00:07:40 not too long back,
00:07:41 but what do you make of this opportunity?
00:07:43 Because that's what it stands at right now, an opportunity.
00:07:48 - Well, I think, Alex, you're right in saying that,
00:07:51 you know, the stock is to be viewed currently
00:07:53 as an opportunity,
00:07:54 and only the narrative is being played out
00:07:57 because, you know, the recent quarter three numbers
00:07:59 were quite disappointing.
00:08:01 The company did not post very good set of numbers
00:08:03 as compared to the second quarter.
00:08:04 And I think, you know, the company is in the process
00:08:06 of setting up its operations.
00:08:08 They have tied up with Blackrock for the AMC business.
00:08:10 I think very soon they'll apply to SEBI.
00:08:13 My sense is that unless the investor has got
00:08:15 a two to three year kind of timeframe,
00:08:17 you know, investment in such kind of stocks
00:08:20 could yield returns only over a longer period of time.
00:08:22 In the short term,
00:08:23 quarterly numbers are not going to depict
00:08:25 the real earnings potential of the company.
00:08:27 But I could tell you one thing that
00:08:28 with a balance sheet size of 140,000 crores,
00:08:31 they are going to create a massive disruption
00:08:34 in the financial services sector.
00:08:35 I mean, when the numbers would come in
00:08:37 and what could be the impact of those numbers
00:08:38 on other comparable larger NBFC players
00:08:41 is a thing which all of us would watch out.
00:08:43 But I would believe that, yes,
00:08:44 if you want to make a decent risk reward
00:08:46 and a large kind of more tier,
00:08:48 I think the timeframe has to be long.
00:08:50 So if the investor has invested here,
00:08:52 he should rest assured,
00:08:53 be positive that this company would do well.
00:08:55 But yes, over the next two to three years.
00:08:57 In the short term,
00:08:58 one should not expect any major fireworks here.
00:09:01 All right.
00:09:02 Next up, we have Manish Ranjan writing to us on YouTube.
00:09:06 He's talking about HDFC Bank,
00:09:07 which has been making headlines since yesterday.
00:09:10 And we've talked a lot about it
00:09:11 based on the fundamentals and earnings.
00:09:13 But Rahul, I'd like to come to you on this.
00:09:15 Is it a good time to buy?
00:09:16 Is this an opportunity to get into the stock?
00:09:19 Yeah, good morning.
00:09:20 See, definitely, I think somehow it looks like an opportunity
00:09:23 because the strong support is placed around 1,463.
00:09:28 And currently the stock is trading at 1,500 levels.
00:09:32 So the risk to reward ratio becomes good
00:09:35 over this current levels.
00:09:36 Although the declines we have seen,
00:09:38 it will be a long watch to see how HDFC
00:09:41 will perform in coming days.
00:09:42 But I think 1,500 levels is a good level to enter into HDFC.
00:09:47 As said by Avinash for the Geo Financial Services,
00:09:51 I think here also you won't see any big fireworks coming in.
00:09:55 Stock needs to consolidate more at the current levels.
00:09:58 And I think going ahead,
00:10:00 these levels will be treated as support.
00:10:03 1,463 is the ultimate one for the short term basis.
00:10:06 If at all stock reaches these level of 1,460,
00:10:09 then it might fall toward 1,300 levels too.
00:10:12 So it's a big watch right now,
00:10:14 although the risk to reward ratio is becoming good
00:10:18 in respect of buying at current levels.
00:10:20 - Got it.
00:10:21 All right, we've got a question on Zomato.
00:10:23 And this one's from Ankush.
00:10:24 He's writing in from Shimla and asking about the stock
00:10:28 which he has bought at levels of 50.
00:10:29 He's got 1,000 shares.
00:10:31 Avinash, this is a long-term question.
00:10:33 And ultimately also, this is a story,
00:10:36 I think that is playing out over the long-term
00:10:38 because behavioral habits have changed
00:10:41 and people are ordering more.
00:10:43 The question is not necessarily about the prospects,
00:10:46 but whether or not this company can make the money
00:10:49 and convert that opportunity into profits.
00:10:52 So therefore, do you think that someone should hold
00:10:55 and buy more at these levels?
00:10:57 - I think, first of all,
00:10:59 the investor has bought in at a very attractive price.
00:11:02 And my sense is that the margin of safety
00:11:05 for that investor is pretty high.
00:11:07 See, looking at the business model of Zomato,
00:11:09 I think one thing is very clear
00:11:10 that the new generation of youngsters
00:11:14 prefer apps like Swiggy and Zomato.
00:11:18 And I think it's now become a daily habit.
00:11:21 So I think clearly over the next, say, two to three years,
00:11:23 Alex, one could see profitability kicking in
00:11:25 both at the operating level and at the cashflow,
00:11:28 at the operationally free cashflow level.
00:11:31 Clearly, these kinds of platform companies
00:11:33 are difficult to build,
00:11:34 and you don't find many competitors
00:11:36 in this field as of now.
00:11:38 So I would say that, yes,
00:11:39 if the investor has got the next two to three years in mind,
00:11:42 he can make a massive amount of money
00:11:43 because this business is going to thrive
00:11:45 quite significantly considering the behavioral habits
00:11:48 and the food consumption habits in our country.
00:11:50 Most importantly, I think now recently we heard
00:11:53 that even the platform fees,
00:11:55 Zomato has increased for most of its vendors.
00:11:57 So that is also going to be clearly a significant mode
00:12:00 for Zomato going forward,
00:12:01 because clearly this platform is a thriving platform.
00:12:04 Many new businesses want to showcase their products
00:12:07 on this platform.
00:12:08 So I think longer term money will be made.
00:12:10 In the short term, it's going to be remaining a range bond.
00:12:13 So I think if the investor has a two to three year call,
00:12:15 he can buy on declines and obviously add on to his profit.
00:12:18 Next up, we have a question from Umapati
00:12:21 and they're talking about Darbar
00:12:22 and they want to buy it for the longer term.
00:12:24 Now we've seen rural consumption weakened,
00:12:27 but in the longer term,
00:12:30 would you suggest buying Darbar at these levels, Avinash?
00:12:34 - Yeah, I think clearly most of these FMCG companies
00:12:37 have a significant vote in terms of their distribution
00:12:40 network, in terms of their brands.
00:12:42 In the short term, there are going to be some breaks
00:12:44 as far as the rural demand goes.
00:12:46 My sense is if the investor again has a long-term view
00:12:49 of at least 12 to 18 months,
00:12:50 then I think Darbar definitely can fit in the bill.
00:12:53 The management has been quite mature.
00:12:55 I think they have right products
00:12:57 for various customer categories.
00:12:59 But I think in the very near term,
00:13:01 if rural demand continues to remain weak,
00:13:04 then I think you could expect a weaker set of numbers
00:13:06 for the December quarter and possibly for March 24.
00:13:09 So I think keeping a long-term view,
00:13:10 I think one can look at it,
00:13:11 but it's better that we wait for the Q3 numbers,
00:13:15 wait for the management commentary
00:13:16 and some key data points on the volume growth number,
00:13:18 which the management would share.
00:13:20 And then I think one could take a call
00:13:21 whether one could make a fresh entry.
00:13:23 - Got it.
00:13:24 All right, Shivashankar from Bangalore
00:13:26 is asking this next question
00:13:28 and asking about Tata Technologies and Yes Bank.
00:13:32 I will go across to you, Rahul, on the technicals.
00:13:34 What would you suggest with regard to these,
00:13:37 or rather actually Tata Technologies,
00:13:38 I'm not sure if you have enough data,
00:13:40 but for Yes Bank, can you tell us?
00:13:43 - Yes, definitely the data for Tata Technologies
00:13:45 is really low for me to make any statement here.
00:13:49 But yes, Yes Bank is something
00:13:52 which has been turned up really well,
00:13:54 especially from the lows of around 17 and a half rupee.
00:13:59 And the breakout we have seen in Yes Bank
00:14:03 was made in November month.
00:14:04 And since then the stock has been making higher highs
00:14:08 on a continuous basis.
00:14:10 I think because of the market scenario,
00:14:12 the stock has faced some minor correction
00:14:15 from last two sessions.
00:14:17 But I think there is a huge support
00:14:20 which is placed around 23 levels.
00:14:23 So I think along with this,
00:14:26 he should keep the stop loss at 23
00:14:28 and carry the trade forward.
00:14:30 In coming days, I feel that Yes Bank
00:14:33 can be seen over levels of 30.
00:14:36 It has a good potential over there.
00:14:38 - Okay, I will go across to Avinash on Tata Technologies.
00:14:41 The question is whether or not
00:14:42 it can be bought at the current level.
00:14:44 Avinash, what do you say?
00:14:45 - Well, I think, Alex, if the investor
00:14:48 has a two-year kind of timeframe,
00:14:50 then I think Tata Technologies,
00:14:52 which issued shares at roughly about 500 rupees
00:14:54 and now trades at 1140, 1150,
00:14:56 can definitely be accumulated.
00:14:58 See, this is a company which operates in a very niche space
00:15:01 and which enjoys a large amount of global clients.
00:15:04 And I think the kind of pedigree
00:15:06 and the kind of management bandwidth
00:15:08 which this company enjoys,
00:15:09 I would not be surprised that a lot of value creation
00:15:11 can happen over the next two years.
00:15:13 In the short term, the markets would obviously look
00:15:15 at the near-term quarterly earnings,
00:15:17 the management commentary.
00:15:19 But I think this company has a great future.
00:15:21 I think you need to have a lot of patience.
00:15:23 And if you have a timeframe of at least 18 to 24 months,
00:15:26 I think you should accumulate a small quantity.
00:15:28 And I think wealth creation would definitely happen,
00:15:30 but I think you need to give some more time.
00:15:33 - All right.
00:15:34 Gentlemen, we have to slip into a very quick break.
00:15:36 Viewers do stay tuned.
00:15:37 We're taking more questions on the other side.
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00:18:56 - Welcome back.
00:19:02 You're watching Ask Profit.
00:19:03 Let's quickly jump into the questions.
00:19:04 And this one's coming from Ambika.
00:19:07 They've bought call options in Hindilco
00:19:10 at a strike price of 620 for five rupees.
00:19:12 And they say, should they exit now?
00:19:15 Rahul, what would you suggest?
00:19:16 - Well, I think the charge structure is quite low.
00:19:21 And I think this momentum will be continued
00:19:24 towards the downside.
00:19:26 And I think 544 is the level to watch on spot, I'm telling.
00:19:31 So 544 is the level to watch.
00:19:35 If at all it got breached,
00:19:37 then I think the stock might fall towards 515 or 500,
00:19:42 sorry, 510 levels.
00:19:44 So I think keep a strict stop loss at 544.
00:19:49 And if at all it gets breaches,
00:19:51 then you can see much more declines.
00:19:53 So keep 544 on your watch list.
00:19:58 - 544, okay.
00:19:59 Because they're losing money at this stage, all right.
00:20:02 So Ambika, hopefully that is helpful to you.
00:20:05 We've got a question on the railway sector.
00:20:07 And Natasha is asking about Titagarh
00:20:09 as well as RVNL and IRFC.
00:20:11 Avinash, these are all stocks that have gained
00:20:13 and in fact, not too long back, they gained once again.
00:20:16 I guess to a certain extent,
00:20:18 there are expectations building ahead of the interim budget.
00:20:21 What would you say about the long-term prospects?
00:20:24 And these are stocks that are perhaps a little elevated,
00:20:27 if you can call it that, on the price side.
00:20:30 So would you suggest fresh entries?
00:20:31 - I think on the whole, the railway sector, Alex,
00:20:36 looks pretty promising because recently,
00:20:38 the railway minister, Mr. Vaishnav, has clearly hinted
00:20:41 that this is going to be a key focus area for the government
00:20:44 and a lot of cargo, which now goes on road transport,
00:20:47 the railway is planning to get it back on the railways.
00:20:50 So I think in terms of rolling stock,
00:20:52 in terms of the railway stations,
00:20:54 in terms of other infrastructure kind of facilities,
00:20:57 a lot of capex is going to be invested
00:20:59 and obviously, which would benefit companies like Titagarh,
00:21:03 companies like obviously, IRFC,
00:21:06 which obviously funds the capex of the government
00:21:08 for the railway ministry.
00:21:09 I would believe that stocks like Texmac or Rail
00:21:13 appear to be quite promising
00:21:14 because now it's a question of relative returns
00:21:17 in terms of absolute gains.
00:21:18 Most of these stocks have almost doubled or tripled
00:21:21 in the last 12 to 18 months.
00:21:23 So especially in case of stocks like Titagarh
00:21:27 or stocks like IRFC,
00:21:28 I would prefer that unless they correct meaningfully,
00:21:31 it's very difficult to make near-term money in these stocks.
00:21:34 So I think unless you've got a two to three year
00:21:36 kind of vision, it's difficult to make money here.
00:21:38 So Texmac appears to be slightly better positioned
00:21:41 compared to Titagarh, which is fair to,
00:21:44 I mean, premium valued as of now.
00:21:46 So I think it's better to sit on these stocks
00:21:49 if you're already invested,
00:21:50 but fresh buying can only be advised at lower levels,
00:21:53 not at the current prices.
00:21:55 - Okay.
00:21:55 Next up, we have a question from Mahesh Kumar
00:21:58 and they're talking about this counter,
00:21:59 Shreeji Trans Logistic.
00:22:01 Avinash, should you have coverage on this one?
00:22:03 - Sorry, I don't cover this.
00:22:06 - Okay.
00:22:07 This is a 270 crore market cap.
00:22:08 They've bought the shares already
00:22:10 and they say that the company is going to give bonus,
00:22:13 but it's currently at a low level.
00:22:14 Rahul, what would you suggest doing from here on?
00:22:17 - Sorry, I'm not able to pull up the charts.
00:22:20 I'm not aware of this.
00:22:21 - It's called Shreeji Trans Logistic.
00:22:24 - Okay.
00:22:26 So while we try and get you a view on that, Rahul,
00:22:31 I will go to the next question.
00:22:36 Vineet from Goa is asking about Salazar
00:22:39 and I had pulled up this as well.
00:22:41 This is Salazar Techno Engineering
00:22:44 and again, this is something that is a play
00:22:48 perhaps on the budget.
00:22:49 And he's also looking for an outlook on sugar companies
00:22:53 like Balrampur Chini.
00:22:54 Avinash, anything that you can speak of
00:22:57 with regard to the potential of these counters?
00:23:01 - I think Balrampur Chini, according to me,
00:23:05 Alex is an integrated sugar player.
00:23:07 And I think now with ethanol pricing again,
00:23:11 going up based for grain-based ethanol,
00:23:13 I would believe that companies like Balrampur Chini
00:23:17 definitely look promising,
00:23:18 but I think you need to stay invested here
00:23:20 for the longer term
00:23:20 because currently crude prices are down.
00:23:23 I think obviously that means that ethanol
00:23:25 is definitely not that very important.
00:23:28 Although the government has said that by FY25,
00:23:31 they will go up to 20% blending.
00:23:34 My sense is that you need to take a longer term call.
00:23:37 In the short term,
00:23:37 the stock may not give you that kind of upside.
00:23:40 And which was the other stock, Alex, which you mentioned?
00:23:43 - The one called Salasar Techno Engineering.
00:23:46 Yeah, I'm right.
00:23:47 - Balrampur Chini, the sugar stocks.
00:23:50 - So Balrampur Chini was already spoken about by Avinash.
00:23:53 Salasar Techno Engineering is the name of the second counter.
00:23:56 - Yeah, I think this is a kind of an EPC play.
00:24:00 And I think they have a decent order book,
00:24:02 but it's a small kind of market cap company.
00:24:05 My sense is in such kind of small caps,
00:24:08 liquidity is a major issue.
00:24:09 So unless the investor can brace in
00:24:11 for a higher kind of volatile kind of situation going forward
00:24:15 unless that preparedness is there with the investor,
00:24:18 only then one can look at investing in this company.
00:24:20 I think the numbers have been pretty good,
00:24:22 but overall I would believe that it's always better to play
00:24:25 in the larger cap and in the largely more liquid
00:24:28 kind of counter.
00:24:29 So I would believe that unless you've not bought in,
00:24:31 if you've already bought in, you can hold on.
00:24:33 But fresh buying is not advised
00:24:35 because in the current scenario, Alex,
00:24:37 the small cap, mid caps have been battered down very badly.
00:24:40 So I think it's better to stay put for some time
00:24:42 on the stocks like Salazar,
00:24:43 at least if you are thinking of a fresh entry.
00:24:45 - All right.
00:24:46 Rahul, do you have a view on Shiji Trans Logistics?
00:24:51 - Yes, surely.
00:24:51 Now I have the charts ready.
00:24:53 See, the stock is facing major declines
00:24:56 since the high of around 73, 74 levels.
00:24:59 And it has not got any kind of reversal till now.
00:25:03 And I think this particular momentum will be continued.
00:25:08 Although we can see some support coming in at 50 levels,
00:25:13 which was made just a few sessions before.
00:25:16 So I think if at all it keeps support on 50
00:25:20 and trade above it,
00:25:21 I think there might be a chance of some bounce
00:25:24 towards 60 and 62.
00:25:27 There, we are able to see there are major juncture
00:25:30 of moving averages on short-term and long-term basis,
00:25:33 but the overall trend is really weak.
00:25:35 And I think one should plan out exit at any bounce
00:25:38 if it at all gets.
00:25:40 - Okay, Rahul, I'm coming back to you
00:25:41 on Power Grid Corporation of India.
00:25:43 And this is a question coming in from Kishore.
00:25:46 He's asking for the next two weeks,
00:25:48 which is a relatively short timeframe.
00:25:51 What are the immediate resistances and supports
00:25:54 that you would highlight?
00:25:55 - Yeah, see, on immediate basis,
00:25:59 resistance on Power Grid is placed around 242 levels.
00:26:03 Once it is crossed, then there is a good breakout,
00:26:06 which will form on daily charts.
00:26:08 And from there, I think the stock has got good potential
00:26:11 to go beyond 250 plus levels.
00:26:15 So keep a watch on 242, which are major resistance,
00:26:19 which I can see right now.
00:26:20 Although on downside, 224 to 225 level is a good support
00:26:25 where 89 days between moving is also placed.
00:26:29 So I think keeping a stop loss at 223
00:26:32 will turn up really good for your trade.
00:26:35 - All right, this one's from Venkatesan from Coimbatore
00:26:38 and they're talking about ICICI.
00:26:40 They bought shares at over a thousand rupees.
00:26:44 It's currently trading below that buy price.
00:26:47 They have a view of one year.
00:26:49 Avinash, would you suggest holding onto this stock?
00:26:52 - Well, I think, see, as far as private banks are concerned,
00:26:56 I think we have seen the numbers of SJFC Bank.
00:26:59 I think the key challenge for the private sector banks
00:27:01 is now the deposit growth.
00:27:02 So I think it's better that the investor waits
00:27:06 for Q3 numbers,
00:27:07 gets to know what the management commentary is.
00:27:10 My sense is that, see, ICICI Bank is the holding company
00:27:12 for various businesses,
00:27:14 like ICICI has put up a disappointing set of numbers,
00:27:17 but ICICI Securities has come with a good set of numbers.
00:27:19 So the core business growth continues to be solid,
00:27:22 but I think what happens on the deposits side,
00:27:25 on the disbursement side,
00:27:26 I think once we get the Q3 numbers,
00:27:27 there will be more clarity.
00:27:28 So as of now, I would suggest the investor to hold on.
00:27:32 Please don't make a panic exit.
00:27:33 And I think broadly the story remains pretty strong
00:27:36 with a strong corporate capex,
00:27:38 with a strong infra kind of spending,
00:27:40 both by the government.
00:27:41 You know, private banks should do well.
00:27:43 So I would believe that, you know,
00:27:44 at least hold on for the next six to 12 months.
00:27:46 You could definitely get your cost price
00:27:47 on a decent risk reward.
00:27:49 - Got it.
00:27:49 Avinash, thanks so much for that view,
00:27:51 as well as Rahul.
00:27:52 Rahul, thank you so much for joining in
00:27:53 and answering all the questions that you did.
00:27:55 We're completely out of time
00:27:56 on this particular edition of Ask Profit.
00:27:58 Hopefully the answers that were given on today's show
00:28:01 benefited you, even if your specific question
00:28:04 was not answered.
00:28:05 We'll be back tomorrow to take even more questions
00:28:07 at 11.30 sharp.
00:28:09 Don't go anywhere.
00:28:10 Lots more coming up over the course of the day.
00:28:12 And this is NDTV Profit.
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00:31:04 - Hello and welcome to NDTV Profit.
00:31:09 I'm Mahima Vachrajani.
00:31:11 Well, Asian Paints is in focus today
00:31:13 on the back of their Q3 earnings.
00:31:15 We have Mr. Amit Singhal, CEO and MD of Asian Paints
00:31:19 joining us on the show and he'll be talking about
00:31:21 how the quarter has gone by and what's in store
00:31:23 for the next coming quarter.
00:31:25 Welcome, Mr. Singhal.
00:31:27 Well, my first question to you would be
00:31:29 that as per analyst estimates,
00:31:31 the quarter has given mixed cues.
00:31:32 We've seen that profitability and margins
00:31:35 have beaten the estimates, whereas for revenue,
00:31:37 we've seen that there's a slight miss.
00:31:40 What has worked and what has not worked
00:31:42 and has it met your internal expectations exactly?
00:31:46 - According to me, I think it's been
00:31:47 a relatively good quarter for us
00:31:49 in terms of what we have seen highs
00:31:51 in every part of the business to that extent.
00:31:55 We have seen the overall volume growths on a double digit,
00:31:59 which I think is quite spectacular in terms of the delivery.
00:32:03 Even if you look at the value growths,
00:32:04 net of the price decrease in terms of what we have taken,
00:32:07 they would come to a level of about seven to 8% overall
00:32:10 to that extent.
00:32:11 So we feel that from an overall revenue point of view,
00:32:14 I think it's been a very good performance,
00:32:17 especially what we saw in Q2 to that extent.
00:32:20 Second, from the point of view of overall margins,
00:32:23 we are now at one of the highest gross margins
00:32:27 in terms of what we see.
00:32:28 Even the PBDIT margins have gone by 400 to 500 BPS points.
00:32:33 So I think it's been a very, very strong quarter
00:32:36 where we have seen double digit growths,
00:32:39 even in terms of our industrial sales,
00:32:41 which has been also a hallmark
00:32:43 other than the decorative sales.
00:32:45 The projects business has also kind of done quite well
00:32:48 to that extent.
00:32:49 So even in the home decor business,
00:32:52 we have seen an overall trajectory
00:32:54 in terms of doing well in terms of newer categories.
00:32:56 So on the whole, I would say
00:32:57 it's been a fairly good quarter for us.
00:33:00 - Right.
00:33:01 And to pick up on the gross margins that you talked about,
00:33:05 like you mentioned,
00:33:05 it's been best in the past 11 quarters now,
00:33:08 and taking crude prices into consideration
00:33:10 and your procurement or hedging strategy that you have,
00:33:13 do you think this will continue in the next coming quarters?
00:33:16 And if yes, how much improvement do you find in the margins?
00:33:20 - See, I would say that in a way,
00:33:23 the gross margins have literally peaked
00:33:26 in terms of our overall assessment.
00:33:29 Going forward, while there was deflation in quarter three
00:33:32 to about 2.3%,
00:33:34 we expect further deflation to continue in Q4
00:33:38 as well to that extent.
00:33:40 But given the fact that today
00:33:42 there has been a little bit of a volatility
00:33:44 with respect to overall crude prices
00:33:47 with respect to the geopolitical situation,
00:33:49 we see that possibly it is very difficult to estimate
00:33:52 in terms of saying that
00:33:54 whether the gross margins can go up or not.
00:33:56 But in our opinion, I think the band of 42 to 44
00:33:59 would kind of continue from a point of view
00:34:01 of overall gross margins as a C8.
00:34:04 We also see increased possibility spending
00:34:06 with respect to overall areas of marketing, distribution,
00:34:10 and new initiatives in terms of what are going to kind of
00:34:13 come in overall to that extent.
00:34:15 And therefore we feel that I think it's reasonable to expect
00:34:18 that possibly this band of margins, of gross margins,
00:34:21 should be maintained in quarter four.
00:34:23 - Right.
00:34:24 So as you rightly mentioned that you plan to spend higher
00:34:27 in terms of marketing and ad costs,
00:34:29 can you just tell me how much percentage of this ad cost
00:34:32 forms of your sales?
00:34:33 - So overall in terms of the marketing expenses
00:34:39 vary from about three to 4%,
00:34:41 depending on in terms of how the environment is
00:34:44 to that extent.
00:34:45 And as you look at possibly there is,
00:34:48 depending on how the markets go,
00:34:50 we can look at possibly putting more monies
00:34:53 in terms of the overall spends.
00:34:55 But I think the whole scenario spans out
00:34:58 in terms of looking at the overall cost
00:35:00 and not only in the marketing cost,
00:35:02 because even the way you kind of distribute material,
00:35:05 the way you kind of look at discounting the market,
00:35:08 all form a combination in terms of the overall strategy.
00:35:12 - Right.
00:35:13 Also we do see that there's some kind of gap
00:35:16 between volume and value growth.
00:35:20 What is the reason for the same?
00:35:21 And do you think that there's some kind of strategy
00:35:24 that you're going to adopt to improve your product mix?
00:35:27 - In fact, we see that in quarter three,
00:35:30 the product mix has actually improved
00:35:32 relative to quarter two.
00:35:34 We see the luxury products growing at a double digit
00:35:37 kind of a framework to that extent.
00:35:39 And in quarter three, we have seen that the T3, T4 cities
00:35:44 have done quite well overall to that extent,
00:35:48 which has given a blip to the economy products overall
00:35:51 to that extent.
00:35:52 And you are seeing a little bit of a increase
00:35:54 with respect to the value and volume gap,
00:35:56 which has kind of come into that extent.
00:35:58 But as I said that today going forward,
00:36:01 there is a larger economy segment in the country today,
00:36:04 which contributes sizably to the overall pain market.
00:36:08 And therefore it is always essential to kind of see
00:36:10 that you are growing in that sector.
00:36:12 If you want to overall log in good growths
00:36:14 as we kind of go ahead.
00:36:16 Despite that the company has been looking at
00:36:19 premiumization as a big strategy
00:36:21 where we are upgrading people to premium
00:36:23 and luxury products going forward.
00:36:25 But as we see it, I think this gap between volume
00:36:29 and value of about three to 4% would continue for some time
00:36:32 as we kind of go ahead,
00:36:33 because the overall contributions of the premium
00:36:36 and the luxury sector are not so strong
00:36:39 in terms of looking at saying
00:36:40 that they can basically take the value
00:36:43 much higher than the volume as we kind of go ahead.
00:36:45 - Right.
00:36:46 Also coming to your segmented performance,
00:36:48 we saw that home decorative industrial prints
00:36:51 and your white teak business has also performed well.
00:36:53 However, if you see your bath fittings segment,
00:36:56 it has declined.
00:36:57 Can you tell me what is the reason for the same?
00:36:59 And do you see the contribution from this segment
00:37:01 increasing in the coming quarters?
00:37:03 - So overall, as you rightly said,
00:37:08 the home decor sector has done fairly well for us.
00:37:11 We are now the number one integrated home decor players
00:37:14 in the market in terms of where we are.
00:37:16 The new categories have done exceptionally well,
00:37:19 whether it is lighting, doors and windows,
00:37:22 fabric, furnishing, and so on and so forth.
00:37:24 You know, the kitchen business has been a little bit flat,
00:37:27 but much better than what we saw in quarter one
00:37:30 and quarter two.
00:37:31 The bath business has been negative,
00:37:32 but lesser negative, I would say,
00:37:34 as compared to what we have seen
00:37:35 in the first half of the year to that extent.
00:37:39 So we are now under the new strategy,
00:37:40 integrating kitchen and bath very strongly
00:37:43 with our beautiful home strategy.
00:37:44 And we feel that this is the right step
00:37:46 in terms of looking at this integration coming.
00:37:49 And as we kind of go forward,
00:37:50 we think we will be able to galvanize kitchen and bath
00:37:53 along with the newer categories
00:37:55 to give us a good contribution as we go forward.
00:37:58 We are looking at now, you know,
00:38:01 the home decor category contributing
00:38:03 to at least about 8% by the end of financial year 26.
00:38:07 - Okay.
00:38:08 And Amit, with respect to Grasim
00:38:12 venturing into the paint business,
00:38:14 do you think that this will pose some kind of competition
00:38:18 to Asian paints?
00:38:19 And do you think that Asian paints
00:38:20 or any sort of peers in terms of paints,
00:38:24 you'll be losing any kind of market share to them?
00:38:28 - So overall, you know,
00:38:31 if you look at the construct of the overall industry,
00:38:34 new competition has always been there.
00:38:38 You yourself know that there are a lot of new players
00:38:40 who have entered in the last about five years also.
00:38:43 Last year, we saw an entry of three new players
00:38:47 in the market to that extent.
00:38:48 And even, you know, the company which you're mentioning
00:38:51 has launched in one of the segments
00:38:54 in terms of already there in the market to that extent.
00:38:57 I do not think that given the construct of the industry
00:39:00 of being of about 80,000 crores,
00:39:03 that we see that any new player can really come
00:39:06 and change the dynamics of the market so easily.
00:39:09 In this industry to even kind of log in
00:39:12 a gross of 5,000 crores in three years
00:39:14 is a real wonder in terms of what I see,
00:39:16 what could really happen.
00:39:17 And therefore I feel that, you know,
00:39:20 in the short to medium term,
00:39:21 I am not seeing any larger changes happening in the market
00:39:25 in terms of the entry of any new competition.
00:39:27 Okay.
00:39:28 And we've also seen that you've infused
00:39:30 approximately 33 crores of equity share capital
00:39:33 in Asian White Cement Holding Limited.
00:39:35 And I believe that is a part
00:39:37 of your backward integration expansion plan.
00:39:39 Can you tell us what's the status of that?
00:39:41 Do you still expect it to be completed by December 25?
00:39:44 And also your integration with WAM,
00:39:46 what is the status for that?
00:39:49 So overall, when we look at the cement project
00:39:52 is definitely, you know, on time,
00:39:55 and we see that we should be able to complete it
00:39:57 by December 25 in terms of the way it is going.
00:40:01 Overall, from the point of view of WAM VA project,
00:40:05 also directionally, I think,
00:40:07 and in terms of overall areas, what we are working,
00:40:11 it seems to be that the project should be on time
00:40:13 and we should kind of see its fruition
00:40:15 in another two and a half years, definitely.
00:40:17 Okay, and in terms of capacity,
00:40:19 you've increased your total,
00:40:20 I mean, capacity in your two different plans.
00:40:23 What is your total capacity at present?
00:40:26 Where does it stand?
00:40:26 And what is the utilization levels of that capacity?
00:40:30 So currently, with the newer expansions,
00:40:34 we have expanded the capacity by almost about 2 lakh KL
00:40:38 in terms of our overall capacity going ahead of earlier,
00:40:42 which was close to about 17 lakh KL to that extent.
00:40:45 This is apart from the capacities which we utilize outside
00:40:50 in our processing centers overall,
00:40:53 and it's almost to the level of about 70, 75% overall
00:40:58 in terms of what we are doing.
00:41:01 Okay, and I believe that in the last,
00:41:05 this financial year, you'd forecasted 4,000 crore of CAPEX.
00:41:09 What is the status of that?
00:41:11 Have you fully utilized it?
00:41:12 And going forward in the next coming year,
00:41:14 what are your CAPEX plans?
00:41:16 So I think overall, we have denounced a CAPEX
00:41:19 of about 9,000 crores in the next three years
00:41:23 in terms of what we are doing.
00:41:24 We have already utilized about 2,000 crores of CAPEX
00:41:28 in terms of the current year overall,
00:41:31 as we look at by March.
00:41:32 And as we go ahead, I think we are still looking
00:41:35 that we should be able to spend closer to the number
00:41:39 of 9,000 which we have given,
00:41:41 or 8,500 which we have given over the last three years.
00:41:45 Okay, right.
00:41:47 Okay, and what is the rural market outlook
00:41:51 that you're looking for?
00:41:52 We've seen that rural market,
00:41:54 volumes from rural market have improved this quarter.
00:41:57 So what do you think, urban or rural?
00:41:59 What will be the driving factor for the coming quarters?
00:42:02 I would say both, because we are equally dependent
00:42:07 from our point of view of growth on both the factors.
00:42:09 The good point is that in quarter three,
00:42:12 we have seen the T3, T4 cities mushrooming back
00:42:17 to that extent and contributing in terms
00:42:19 of the overall numbers to that extent.
00:42:22 And therefore, I think the hopes are good
00:42:25 as the harvesting season approaches to that extent
00:42:29 and the aggregator and demand picks up.
00:42:31 Overall, we do hope that both urban centers
00:42:35 and the rural centers should kind of really grow
00:42:38 as what we have seen in quarter three.
00:42:41 And I think that would be definitely defining
00:42:42 the overall growth for the coming quarters.
00:42:45 Okay, and my last question to you would be,
00:42:47 what is the outlook for FY24 and 25
00:42:50 in terms of both top line and bottom line?
00:42:52 So as it is, I think it is too early
00:42:56 to kind of talk of the FY25.
00:43:00 I think at best we are looking at in terms of the,
00:43:03 I think at best we are looking at in terms
00:43:05 of the double digit volume growth trajectory should continue.
00:43:10 And we would possibly look at how quarter four goes
00:43:13 and then looking at certain other factors
00:43:16 which are happening in the country to see
00:43:18 what would be possibly the growth
00:43:19 of overall financial year 25.
00:43:22 All right, so you expect that the volume,
00:43:24 the double digit volume growth will continue
00:43:26 in the coming quarter.
00:43:28 That's a good sign, that's a healthy sign.
00:43:31 Thank you so much, Amit, for speaking with us
00:43:33 at NDTV Profit and Sparing Your Valuable Time.
00:43:37 Thank you so much.
00:43:37 Thank you so much.
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00:46:14 Hello and welcome to NDTV Profit.
00:46:19 Joining us today is Mr. Debashree Chatterjee.
00:46:21 He is the CEO of LTI Minetree.
00:46:23 He's speaking to us a day after the company
00:46:25 declared its third quarter earnings,
00:46:27 where revenue inched up by 1.2% quarter on quarter
00:46:31 to about 9,016 crore,
00:46:33 but there was a dip in the margin by about 60 basis points.
00:46:37 Mr. Chatterjee, welcome to NDTV Profit.
00:46:39 - Good morning and thank you for having me on your show.
00:46:44 - Thank you, sir.
00:46:45 The pleasure is all ours.
00:46:46 Let's start with how the year started for you.
00:46:50 You had targeted double digit growth
00:46:52 at the start of the year.
00:46:54 Where do you stand now?
00:46:55 What is the picture that you can give us
00:46:58 for the next quarter,
00:46:59 as well as some cues about FY25?
00:47:02 - So as far as the year is concerned,
00:47:07 we must say that this is unprecedented times
00:47:10 where maybe it is the macro
00:47:14 and the cautiousness of a client environment
00:47:17 coming out of the pandemic,
00:47:19 where there was a lot of spend,
00:47:20 clients becoming cautious about their spend,
00:47:22 looking at ROI of the spend
00:47:25 that they have done during the pandemic,
00:47:26 keeping all these things in mind.
00:47:28 I don't think we have seen this kind of caution
00:47:31 in client environment for the last four to five quarters.
00:47:34 And we were quite positive that growth will happen,
00:47:39 but that's why we called out very early
00:47:42 at the beginning of the quarter
00:47:43 that we don't anticipate that growth.
00:47:46 And having said that,
00:47:50 we have also gone through the integration process.
00:47:54 So there was a time taken to ensure
00:47:58 that two companies of similar size coming together
00:48:01 and we have unified capabilities,
00:48:05 all aligned to the go-to-market strategy.
00:48:08 So all these things also took some time,
00:48:11 but what has happened in the last quarter
00:48:14 is we never anticipated the kind of furloughs
00:48:18 that we have seen in Q3.
00:48:21 We normally have furloughs in Q3, which is normal.
00:48:23 We even expected above average furloughs,
00:48:26 but what has happened now is we have seen furloughs
00:48:30 much deeper into the industry segments like BFS,
00:48:33 where we normally have furloughs.
00:48:35 But not only that,
00:48:36 we have also seen furloughs coming in those verticals
00:48:39 or those industries where traditionally
00:48:41 we never used to see furloughs,
00:48:43 like energy and utility, for example.
00:48:45 So the furloughs have definitely been a dampener
00:48:50 and the delayed decision-making
00:48:53 that we have been talking about
00:48:54 in the last two quarters as well, that continues.
00:48:57 There are many deals that we have closed,
00:48:58 but there are a lot of other deals that we are
00:49:01 almost at the final stage of closure,
00:49:02 which are just getting shifted to the next quarter.
00:49:05 So hopefully we should be able to announce
00:49:07 some of those things as we go along.
00:49:10 So essentially it's the furloughs
00:49:12 and the delayed decision-making
00:49:13 which has kind of impacted the Q3.
00:49:18 Now getting into Q4, it's very clear that
00:49:22 most of the, some majority of the furloughs
00:49:25 should start coming back,
00:49:27 but they will come back gradually.
00:49:28 It is not that they will come back in one shot.
00:49:31 So that also means that the uptake that we expected
00:49:36 will take a little bit of time.
00:49:37 So keeping that in mind,
00:49:39 we called out our overall,
00:49:43 how the revenues will shape up in terms of Q4.
00:49:46 And from a longer term perspective,
00:49:48 if you look at the margin program that we had set aside
00:49:52 as a part of the merger integration,
00:49:54 we had very clearly said that
00:49:57 we will be taking the margin up.
00:50:00 We were on that journey.
00:50:01 And I think the plan still remains intact as a,
00:50:05 because margin is not a one quarter phenomenon.
00:50:07 It's a discipline, it's a program that you lay out
00:50:10 and that program is pretty much on track.
00:50:12 All that we are saying is,
00:50:14 given the fact that our utilization is so high,
00:50:17 given the fact that we have closed so many deals
00:50:19 which require ramp up,
00:50:21 we have to reinvest back into the business.
00:50:22 So rather than chasing the margin,
00:50:26 or rather we are just trying to not hold the margin program,
00:50:29 but just differ it by a few quarters
00:50:31 so that we can focus on the growth
00:50:34 as and when the markets open up,
00:50:37 as and when the deals ramp up.
00:50:39 We want to ensure that we can invest in terms of the growth.
00:50:43 And then again, the margin program will fall back on track
00:50:46 after a few quarters.
00:50:47 - Okay. Since you mentioned about margins,
00:50:50 the EBIT margin took about a 60 basis points hit in Q3.
00:50:54 You mentioned furloughs was the reason.
00:50:56 Just what I wanted to ask,
00:50:58 will you be able to achieve your 17 to 18% EBIT margin
00:51:03 for FY24?
00:51:04 What margin levers are still in play
00:51:06 for that thing to be achieved?
00:51:08 - No, we have very clearly called out that,
00:51:12 for FY24,
00:51:15 and we are not going to,
00:51:18 that 17 to 18% range does not hold good.
00:51:21 So we are going to, but at the same time,
00:51:23 the plan remains intact,
00:51:25 but we're just differing it by a few quarters.
00:51:27 But when you talk about the EBIT, just to clarify,
00:51:30 we lost almost 200 basis points because of furloughs,
00:51:33 fewer working days,
00:51:34 and quite a bit of seasonal pass-throughs
00:51:37 that we have in our business in Q3.
00:51:40 But we recovered 80 basis points from our SG&A efficiency,
00:51:44 as well as 60 basis points from our other operating efficiency.
00:51:48 So we lost 200, gone back 140.
00:51:50 That's why you see a decline of 60 in terms of our EBIT.
00:51:53 - Time for a quick break.
00:51:54 On the other side, we'll continue our conversation
00:51:56 with LTI Maintries Debashish Chatterjee
00:51:59 about the company's outlook for the coming quarters.
00:52:01 Stay tuned.
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00:54:21 - Welcome back.
00:54:25 We are still with LTI Maintries Debashish Chatterjee.
00:54:29 This was your highest ever inflows at about $1.5 billion.
00:54:33 That is about 15% quarter on quarter growth,
00:54:37 but revenue is up marginally.
00:54:39 So clearly the conversion is still not happening.
00:54:42 So can you give us a picture about
00:54:43 how the discretionary spending is shaping up?
00:54:45 Are you seeing some green shoots going forward?
00:54:48 - Discretionary is down.
00:54:50 I think discretionary is definitely
00:54:52 one of the primary challenges that we have faced
00:54:56 as an organization,
00:54:56 because if you look at the overall profile of our revenues,
00:55:00 it has been heavily dependent on
00:55:03 the discretionary spend of the clients.
00:55:06 We knew two, three quarters back,
00:55:08 that's why we have been focusing in terms of the larger,
00:55:10 or rather multi-year cost takeout deals.
00:55:14 Now, what you need to appreciate is that this,
00:55:17 the cost takeout or the efficiency deals,
00:55:19 it takes much more time to mature
00:55:21 because the decision cycle is longer.
00:55:24 And on top of that, they're getting delayed as well.
00:55:27 But the good news is that once the deal gets signed,
00:55:30 it's almost like a multi-year deal.
00:55:32 So you have an opportunity to get a steady revenue
00:55:35 over a period of time,
00:55:36 but it takes time to ramp up as well
00:55:38 because there could be potential transition
00:55:40 also involved in those deals.
00:55:41 So keeping all these things in mind,
00:55:43 at a broad level, discretionary has come down
00:55:47 so that the projects are down,
00:55:50 more of cost takeout deals going on,
00:55:52 the ramp ups have started.
00:55:55 So the $1.5 billion order flow,
00:55:57 we are really excited about it,
00:55:59 but we also know that it will take some time
00:56:00 for us to get those fully ramped up.
00:56:03 So that's why the revenue,
00:56:05 which will kick in, will take some time.
00:56:07 - Okay.
00:56:08 Final couple of questions to you, sir.
00:56:09 You aspire to become a $10 billion company
00:56:11 within the next four, five years.
00:56:13 Where do you stand on that target now?
00:56:16 Is there some revision?
00:56:17 Will you push back that target a bit?
00:56:20 - Well, if I'm pushing back my overall plans
00:56:23 by a couple of quarters,
00:56:25 and if the revenue has been not in line
00:56:28 with our expectation,
00:56:29 obviously the plans will be pushed out
00:56:31 by a few quarters,
00:56:32 but I can assure you that as an organization,
00:56:34 we have enough things going on.
00:56:36 We still feel that, you know,
00:56:38 as and when the market opens up,
00:56:39 we are in a position to capture the market opportunity
00:56:41 better than anybody else.
00:56:43 And we have also got, you know,
00:56:45 a lot of plans of doing, you know,
00:56:47 inorganic at some point of time.
00:56:48 There are conversations.
00:56:49 We are always looking at opportunities.
00:56:52 So when you talk about the $10 billion plan,
00:56:54 that has got, you know,
00:56:55 both organic as well as inorganic components.
00:56:57 And, you know, that plan doesn't, you know,
00:57:00 that plan doesn't get changed.
00:57:01 Maybe it gets shifted by a few quarters
00:57:03 because of the current macro and the headwinds,
00:57:06 but that doesn't mean that we are changing
00:57:07 any of the plans.
00:57:09 - Got it.
00:57:10 Final question to you, sir.
00:57:11 Your president, Mr. Sudhir Chaturvedi,
00:57:13 spoke with us in the previous quarter,
00:57:15 and he said that LTI Mintree is seen
00:57:17 as the best alternative to top tier players.
00:57:20 We are a breath of fresh air,
00:57:21 as what he had described LTI Mintree.
00:57:24 Will you agree with that assessment still?
00:57:26 Are you still scoring above your peers?
00:57:29 - Absolutely.
00:57:31 I mean, whenever there's an opportunity
00:57:32 in terms of consolidation,
00:57:33 I think I can't tell you more details,
00:57:36 but in the last quarter,
00:57:37 I have been personally involved in a couple of opportunities
00:57:39 where we have competed with tier ones and won them.
00:57:43 And I think what my colleague had mentioned
00:57:50 is when you talk about LTI Mintree,
00:57:53 we are still, we have become larger.
00:57:55 We want to maintain the same level of agility
00:57:57 and nimbleness with which we support our clients.
00:58:00 And that's what is important at this point of time.
00:58:03 The capabilities that we have is exactly
00:58:05 what the clients are looking for
00:58:07 in terms of the future developments, et cetera.
00:58:12 So in all respects, we are well positioned,
00:58:15 but the macro environment has been overbearing
00:58:19 at this point of time.
00:58:21 - All right.
00:58:22 Thank you so much, Mr. Chatterjee,
00:58:23 for speaking with us today
00:58:24 and all the best for Q4 and the year ahead.
00:58:28 - Thank you so much.
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01:01:30 - Hello and welcome to NDTV Profit.
01:01:34 I'm Amit, and you're watching the Portfolio Manager.
01:01:37 And my guest today is Gurmeet Chadha,
01:01:39 who is the Managing Partner and CIO at Complete Circle PMS.
01:01:43 Gurmeet, thank you very much for joining us on NDTV Profit.
01:01:46 Let's start with the investment thesis that you have.
01:01:49 You know, you have two kinds of portfolios.
01:01:53 One is a core portfolio
01:01:54 and the other is satellite portfolio.
01:01:56 Gurmeet, take us through the investment thesis
01:01:58 for the core portfolio.
01:02:01 - Yeah, thank you.
01:02:02 Thank you for having me.
01:02:03 You know, so, you know, the portfolio is one.
01:02:05 We basically divide the portfolio into two parts,
01:02:08 which is core and satellite.
01:02:11 At the heart of the metric is, you know,
01:02:13 our basic philosophy is growth at reasonable price.
01:02:16 So we are still largely growth investors,
01:02:19 but not at any price.
01:02:20 By core portfolio, we mean businesses we want to own
01:02:24 for a long period of time.
01:02:26 Here, the focus is on the business.
01:02:28 Here, the focus is on ownership of business,
01:02:32 where we want to hold the stock for five, 10,
01:02:34 maybe longer years, if the investment thesis stands.
01:02:37 And here, we try to make few times
01:02:40 and not just this 10, 15% return.
01:02:42 So I would like to hold some of the names
01:02:44 for longer periods of, let's say, 10, 15 years
01:02:46 to probably make, you know, 10, 15 times over it
01:02:49 over a very long period,
01:02:50 rather than just be happy with 10, 15%.
01:02:53 We follow three financial filters here,
01:02:55 and then there are quality filters.
01:02:57 The first financial filter is that the top line
01:02:59 should double in three to four years,
01:03:01 which means we are chasing 18, 20% growth.
01:03:04 So a lot of the MNCs, some of the PSUs
01:03:07 may not make the cut, which generally are good companies,
01:03:09 but may not be good from our filter point of view.
01:03:12 Any growth in top line should not be at the cost of margins.
01:03:16 So margins should be expanding.
01:03:18 So let's say, for example, you have Maruti,
01:03:20 which used to sell probably 7 lakh cars in 2015.
01:03:23 They said they'll end up probably selling 18 lakh units,
01:03:26 but the margins have dropped.
01:03:27 As market has moved from sedan to UBs,
01:03:30 the margins have come to single digits or double digits.
01:03:32 So it hasn't really resulted in much,
01:03:35 let's say, capital appreciation.
01:03:36 So are some of the pharma names and so many others,
01:03:38 but top line has happened, but margins have been shrinking.
01:03:42 It hasn't led to any shareholder gain.
01:03:43 So any top line growth has to be accompanied
01:03:46 by margin expansion.
01:03:47 And for the both of two, you know,
01:03:50 for sales to grow and margins to grow,
01:03:52 the heart of the core DNA has to be innovation.
01:03:55 So you should be continuously innovating
01:03:57 and that reflects in the value add you do
01:03:59 to the product and services.
01:04:01 Again, taking another example, same example,
01:04:03 let's say the largest OEMs and supplier of the auto,
01:04:07 which is Uno Vita, their kit value per car has gone up
01:04:10 from let's say 3,000 to 26,000, 27,000 rupees
01:04:13 over the last six, seven years.
01:04:14 And it's been more than a 10-packer in the same space
01:04:17 that auto has gone through slightly rough patch.
01:04:19 So the core DNA has to be innovation.
01:04:21 This innovation would be in terms of technology,
01:04:23 in terms of new products you use,
01:04:25 in terms of new processes, backward integration,
01:04:30 molecules you develop.
01:04:31 So it could be across sectors and not just confined
01:04:35 tech or manufacturing alone.
01:04:37 So the core portfolio, and then obviously you have
01:04:39 the return ratios.
01:04:40 This essentially is 80-85% part of the portfolio,
01:04:44 which you want to hold for a very long time.
01:04:46 So how many stocks would be there
01:04:47 in that core portfolio of yours?
01:04:51 Between 14 to 17 stocks, maybe 18 stocks
01:04:56 would be part of the core portfolio,
01:04:59 which we want to hold for a longer period of time.
01:05:01 So when you say that your key themes are BFSI,
01:05:06 auto, manufacturing, consumption, and IT,
01:05:09 take us through some of the companies or portfolio companies
01:05:15 where you see that kind of 10x baggers
01:05:20 which are going to come in.
01:05:21 Because you're going to invest in it,
01:05:22 but not going to exit for another 10 years.
01:05:25 So how are you going to look at it?
01:05:28 So our top themes, we work on this philosophy
01:05:32 to invest what you know more.
01:05:34 I'm essentially a banker, so obviously I like BFSI
01:05:37 more, financials more.
01:05:38 And we're not restricting it only to banks and NBFCs.
01:05:41 We want to play the complete space, which includes
01:05:43 private banks, includes NBFCs, includes capital market
01:05:46 participants, which is let's say depositories,
01:05:50 RTA agents, exchanges, AMCs, insurance names,
01:05:56 so it includes other financials as well.
01:05:58 So just to give you a few indicators,
01:06:00 for example, if you see mortgage GDP in India is about 11%.
01:06:05 That's about 20% for Thailand and about 35% for Malaysia.
01:06:08 I'm not even getting into the developed nations.
01:06:10 So huge, huge market.
01:06:11 The entire mortgage market is just 50 lakh crores,
01:06:14 of which 13 lakh crores is between SBI and SDRC.
01:06:17 So you probably need more institutions and maybe
01:06:21 another SDRC, SBI, maybe a dozen more to increase
01:06:25 this mortgage penetration, maybe 20% to 30%
01:06:28 as we go along this decade.
01:06:29 So do you find SBI and SDRC bank a 10-bagger?
01:06:34 I can't say that everything could be a 10-bagger
01:06:37 in this space, but they'll be very steady in this space.
01:06:39 But some of the capital market participants, the depositories,
01:06:43 the AMCs, the RTAs could be in that 5, 10-bagger range.
01:06:47 Some of them have already delivered probably that kind
01:06:49 of return in the last two years.
01:06:51 But if you take a more long-ish view also,
01:06:53 you know, pretty, pretty soon.
01:06:54 Look at, for example, the MF total.
01:06:56 We just crossed 50 lakh crores.
01:06:58 The MD base is 200 lakh crores.
01:07:00 So a lot of the growth is very, very structural
01:07:02 and secular in this space.
01:07:03 So we play through private banks.
01:07:05 We play through some of the PSUs, as you rightly said,
01:07:07 and through depositories, exchanges, and others.
01:07:09 And in the outer space, you are mainly playing
01:07:14 through the allied sector, or is it going to be the OEMs,
01:07:18 which you're looking at?
01:07:19 Because OEMs go through ups and downs in terms of margin,
01:07:23 based on how various factors impact them.
01:07:27 So, you know, if you see, it's again,
01:07:30 through the entire-- we play the entire value chain.
01:07:33 So we like PVs more, which is passenger vehicle car more.
01:07:36 Again, if you see now, the trend is towards UVs and SUVs.
01:07:39 So two-thirds of the cars sold are SUVs.
01:07:41 And if you see, again, the ownership,
01:07:44 so number of cars in India, the total cars right now,
01:07:47 which meets the safety norms of about 35 million.
01:07:50 This number itself will grow.
01:07:52 You'll reach a stage where probably
01:07:54 the number of four-wheelers and two-wheeler sold
01:07:56 will be the same six, seven years from now.
01:07:59 So we like M&M and Tata Motors.
01:08:01 Tata Motors have been very lucky there.
01:08:04 M&M also, to a large extent, still trades at about 15 times.
01:08:07 Then we like the, as you said, the entire value chain of it,
01:08:10 the Uno Middas, the Sona VLW, the Sandar
01:08:14 technologies of the world, the KPITs of the world,
01:08:17 which actually makes-- which are into case, which is connected
01:08:19 autonomous shared electric, which is the embedded software
01:08:22 part of the car.
01:08:23 So we want to play that complete chain.
01:08:25 In fact, we are of the opinion that this sector has come out
01:08:29 after a four, five-year lull.
01:08:31 We are very good four, five years ahead,
01:08:33 as far as playing this entire value chain is concerned.
01:08:36 And again, we are seeing dememolization there.
01:08:38 So that adds to the margin.
01:08:40 That's the second parameter we spoke about,
01:08:42 which is expanding market.
01:08:44 Let's talk about the satellite portfolio of yours,
01:08:47 because it's interesting that there, the time frame is much
01:08:50 lower for you.
01:08:51 And whatever profits you earn from there,
01:08:53 you plow back into the core portfolio.
01:08:56 So how does that work?
01:08:58 What kind of-- how do you select stock for the satellite
01:09:02 portfolio?
01:09:04 So just to-- just spending 30 seconds more on core.
01:09:07 So it's BMSI, it's auto manufacturing.
01:09:11 Manufacturing also covers auto to an extent.
01:09:13 The fourth one, which we like, is consumption,
01:09:15 which is a premiumization of consumption,
01:09:18 which we are seeing, whether it is hotels,
01:09:20 whether it is the likes of Tata Consumer, whether it is--
01:09:23 the travel Indians are doing.
01:09:24 So that thing comes under that.
01:09:26 Satellite portfolio is more tactical.
01:09:29 That's basically a special situation portfolio.
01:09:31 We want to take advantage of any corporate actions,
01:09:34 like de-merger, a change of motor,
01:09:37 any change in regulation which has happened,
01:09:39 which can be a tailwind for the sector.
01:09:42 So I'll give you an example.
01:09:43 Sundaram Clayton got split into three.
01:09:45 You've got an auto ancillary, you've
01:09:46 got the holding company, which is TPS Holding,
01:09:48 and you've got a preference share, which is giving
01:09:50 your dividend at around 10%.
01:09:52 This happened when the stock was about $4,000.
01:09:55 The stock has doubled in the last one year.
01:09:57 Obviously, some of it is because of market.
01:09:59 The Sundaram Clayton stock has got listed,
01:10:01 which is the ancillary part of it, which now is
01:10:04 at about $1,500, $1,600.
01:10:05 And the preference share is due to mature in Feb.
01:10:07 So just by playing that story, you
01:10:09 would have made very handsome returns.
01:10:12 Another example is the change of ownership, change of promoter.
01:10:15 So one company we bought was Bukant Steel,
01:10:17 where Bajaj acquired almost 70% stake from the Shah family.
01:10:21 They infused capital, sold a piece of land,
01:10:24 almost $1,500 came in.
01:10:26 The stock was available at about $100 at about $1,400
01:10:29 per market cap.
01:10:31 It was a no-brainer, was available at 4.5 times earnings.
01:10:34 And steel was going through an up cycle.
01:10:37 So you had the others trading at 15, 20 times.
01:10:40 And this was available at very low single digit.
01:10:42 So we played that.
01:10:43 It again has doubled.
01:10:44 So some of these examples are there.
01:10:46 We overwent on reliance because we
01:10:49 wanted to have a pie of geo-financial.
01:10:51 So tactically, we went in there.
01:10:53 So that satellite part for us, where
01:10:56 the view is confined to the special situation playing out.
01:10:59 And any money made is then, as I said,
01:11:01 is ploughed back into the court.
01:11:03 Will you consider geo-financial as a multi-bagger
01:11:06 to be held for 10 years?
01:11:09 I would think so because they would be incubating
01:11:13 more businesses, which includes broking,
01:11:16 which includes insurance, which includes AMC.
01:11:19 This could be something--
01:11:20 I mean, I'm not trying to draw any parallels here.
01:11:22 But it's something what probably Bajaj
01:11:24 has been serving in the last decade.
01:11:26 And the kind of team they have, they have Vitesh.
01:11:28 Mr. Kamath is there as the director.
01:11:30 They're stitching together a very, very good team.
01:11:33 But it's long drawn.
01:11:34 The lending book takes time to build.
01:11:37 Insurance and AMC business have very long gestation period.
01:11:40 So I agree with you.
01:11:41 You've got to have a probably long issue, which is fine.
01:11:43 Plus, there has been some headwinds in the sector.
01:11:47 Sorry, sorry.
01:11:48 I didn't get your point.
01:11:48 I said there has been some headwinds in the sector,
01:11:50 in the NBFC sector, for lending, retail lending,
01:11:53 and unsecured lending.
01:11:54 No, it's not headwinds.
01:11:55 It's just that the regulator wants
01:11:57 to be a little more prudent, considering the past experience
01:11:59 we have had.
01:12:00 RBI data shows some stress in small ticket loans,
01:12:03 especially, which is less than 50,000.
01:12:05 But the quality ones, which are like, let's say,
01:12:07 Chola or Bajaj or some of the better names,
01:12:09 I don't think they have any reason to buy.
01:12:12 So typically, what is the timeline
01:12:15 for these satellite portfolios that you have?
01:12:19 As I said, the situation paying out,
01:12:21 it could vary from 12 to 24 months, maybe a little more.
01:12:25 Some of the stories I mentioned just now probably played out
01:12:27 within 9 to 12 months.
01:12:29 So happy taking some money off there.
01:12:31 It also helps you maintain some dry powder
01:12:33 for any volatility in the market,
01:12:35 because the satellite portfolio would never be more than 50%,
01:12:37 20% of the portfolio.
01:12:39 So it also helps you, especially when markets
01:12:41 are trading at where they are, it
01:12:44 makes sense to have some dry powder also in the portfolio.
01:12:47 What is the normal level of dry powder that you normally keep?
01:12:50 Yeah, our mandate is not really to be in cash,
01:12:52 because when the client gives you money,
01:12:53 it's meant for equity.
01:12:54 But as I said, we at these levels,
01:12:57 because the markets are run up quite a bit,
01:12:59 about 5% to 10% cash or something.
01:13:01 It's not a huge cash flow we are taking.
01:13:03 But that's more for any opportunities which may come,
01:13:05 for any volatility in the market.
01:13:07 And also, I would also say, there is some pockets
01:13:10 have become very expensive, especially small microcaps,
01:13:13 some of the CAPEX, some of the railway,
01:13:16 and some of the defense-related names.
01:13:18 And we want to buy them, just that the price is not
01:13:21 too alighting.
01:13:21 So it helps you probably stay on the sidelines.
01:13:24 And mind you, staying on the sidelines also
01:13:26 wants you 7-8%.
01:13:27 That's what even the fixed-interest rates
01:13:29 are pretty decent these days.
01:13:30 So it doesn't hurt you too much.
01:13:32 Gurmit, hang on there.
01:13:33 We'll come back after a short break
01:13:35 and discuss this pocket where we're
01:13:38 seeing some kind of overvaluation coming in
01:13:40 and getting expensive.
01:13:42 Stay tuned to The Portfolio Manager.
01:13:44 You're watching NDTV Profit.
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01:16:08 Welcome back.
01:16:10 You're watching The Portfolio Manager on NDTV Profit.
01:16:12 And with me is Gurmeet Chadha, who
01:16:14 is the managing partner and CIO of Complete Circle PMS.
01:16:19 Gurmeet, before the break, you spoke about the fact
01:16:23 that there's some sections of the market which
01:16:25 is now becoming overheated, or I would say,
01:16:30 rather than overvalued.
01:16:32 Some pockets of small caps.
01:16:34 You spoke about defense.
01:16:35 And you also spoke about railways coming in.
01:16:39 Take us through the small cap pack,
01:16:41 because we have seen a big outperformance happening
01:16:43 in the small cap and the mid cap sector.
01:16:46 How do you see this sector now at this point in time?
01:16:51 So it won't be wise to just spread the entire sector
01:16:54 with the same thrust that everything is expensive.
01:16:56 But yeah, large pockets are expensive.
01:16:58 If you see the small cap index, it trades at 26 times earnings.
01:17:01 It was, let's say, Nifty 21 times,
01:17:03 which is I'm talking one year forward.
01:17:06 Last one year return for Nifty is 18, 18 and 1/2.
01:17:09 Small cap index is more than 50% up.
01:17:12 And we've seen that in the past, that over long periods, which
01:17:15 is, let's say, 10 years, the difference is just 1% or 2%
01:17:18 between all these indices.
01:17:21 And if you remember December 2017,
01:17:24 we had a very stellar earnings small cap.
01:17:26 In 2018, we saw 20%, 30% correction,
01:17:28 without Nifty really having much correction.
01:17:30 So the nature of this space is that 10,