What is your opinion on the likes? Citi shares market share gains with HDFC Life; I believe margin expansion and value convergence. What is your view on this collection of stocks?
Overall, the insurance sector has underperformed over the past year. story of penetration; This sector has become a very interesting sector when the market as a whole has not performed as spectacularly as people have been led to believe in terms of margin improvements etc. But as we track the results for the last quarter or so, See the breaking story below. They still can’t play when it comes to the progress they’re actually offering.
Profits either haven’t come in or profits haven’t improved as expected and the sector as a whole has become overvalued, leading to underperformance. Now posting the correction, I still think SBI Life is a bit expensive. But HDFC Life seems to have some value and we can see that the stock is doing well. ICICI Prudential Life sold off sharply after touching a high of around Rs 620. Now back to 450-460 levels. So when there is a chance of getting a percentage I think ICICI Pru is giving a bigger potential.
Much has been said about the worst IPO performance in a decade. The stock is down more than 75%, but it’s also starting to show some bias toward other emerging companies. There is a huge movement on Policybazaar. What’s your strategy in all these new age companies – why don’t you take the plunge?
Yes, Basically, the strategy is to look at their prices every day and be happy that I didn’t buy the day before, so I think this strategy continues until now. That may change at some point in the future, which could actually end up buying one of these stocks, but I’m not sure when.
What about L&T? Does it remain a definitive holding within the portfolio? Would you include other items within the capital goods area?
L&T has to be in the portfolio as it has reached a high growth stage when it comes to capital expenditure in the country. They have already received orders that have exceeded analyst expectations, so they are looking to improve as execution picks up, and are also focused on reducing their leverage on the balance sheet, which has been a concern for some time. L&T should definitely be one of the big bets on the large side of the portfolio.
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The stock prices of modern companies are falling every day. I know you don’t own one, but I can say that it might change, and you probably own some, or at least one. which one?
in the radar and At some level, In my view, they will be buyers because they have sustainable business models and a growth paradigm that can lead to future profitability. Now the management needs to focus on this. Their focus is on business and they need to go to independent cash flow in the next two to three years. When we see specific signs of it, It’s time to look at these stocks.
While Nykaa is generating cash; My only concern is the way this whole bonus issue is handled by Nykaa Promotions. Falguni Nayar is a banker and he understands what the markets want and the markets don’t like the way he is handling this whole bonus issue. Also, does stepping down as CFO leave a bitter taste?
Yes, That said, the stock has underperformed so much that it fell even after the bonus and the split. It has been publicly stated that these stunts should be avoided by management. A bonus of 5:1 is so strange that performance should be focused on, and each stockholder gets 6 shares of the stock, which is the calculation for retail investors. It’s not easy for retail investors to figure out what happened.
I think it’s creating a bitter taste in the mouth in the near term, but in the long run, if the company delivers, people will forget. We need to be aware of that.