We have been equal weight auto and within that our preference has been more towards two-wheelers and passenger vehicles rather than commercial vehicles. We believe within auto space it is extremely important to focus on rural recovery. Auto stocks have risen a lot from the bottom but the real question for auto is if the demand sustainable or the rise in demand in October and November is a function of the pent-up demand.
September quarter earnings were ahead of expectations and that at 23-24 times forward earnings on the Nifty, the market was not expensive.
Nilesh Shah, Group President & Managing Director, Kotak Mahindra AMC
One important thing so far is that National Credit Guarantee Trustee Company (NCGTC), the guarantee provider, first time is providing guarantee for the non-funded exposures because among the 26 sectors which are identified, one of them was construction sector and it was thought that for them the bank guarantee facility would be more important than the fund based facility. So, that is I think in my view one of the most important modification which they have done.
1.5 lakh crore disbursed in one go under ECLGS 1.0; I think that has been an immense success in my view.
CS Setty, Managing Director, State Bank of India
The unified tariffs will give consumers more options to buy gas. The entire increase in tariffs will happen on the day of the effective date. We expect reasonable and increased consumption of gas post these regulations and customers up to 300 km will only pay 40 percent of the unified tariffs. We will take 1-2 months more for effective date for unified tariffs and open access.
DK Sarraf, Chairman, Petroleum and Natural Gas Regulatory Board
PNGRB agreeing to their recommendations on unified tariffs is a positive. It is good for all the existing entities. They would be able to maintain their own business at the same level. However, whether oil marketing companies (OMCs) can set up their own dispensers once agreement with city gas distribution (CGD) ends is a grey area.
AK Jana, MD, Indraprastha Gas
Clearly, the winners are the gas pipeline companies such as GAIL and GSPL because while this clearly states that it does not change the pipeline tariff at an entity level so whatever tariff GAIL and GSPL has currently earning will continue. So as the tariff does not change, there is a significant opportunity for volume increase in the longer term and that is a significant potential gain for the pipeline companies. Gas will now become very fungible across the LNG terminals and will find the markets in deeper geographies. The upstream gas producers which could potentially get a better price as a result of this gas exchanges and gas marketing companies, - so these are essentially the list of positives.
Jal Irani, Senior Vice President - Institutional Equity Research, Edelweiss Financial Services
The Rs 450 crore that is the primary is basically going to do two things. One is, we are going to use that money to pay off term loan of Rs 165 crore that was used to build restaurants last year. The balance will be used for building restaurants in the future along with the other expenses like the IPO expenses and in general corporate purpose expenses. Burger King India is looking at opening smaller restaurants and also building restaurants on highways. We are aiming to open 700 restaurants by December 2026.
Rajeev Varman, CEO of Burger King India
The midcap space has still not reached all-time highs. You have seen the Nifty reach its all-time high, while the mid and smallcaps have still lagged behind. That is primarily also because we have not seen similar amount of flows into the mid and smallcap fund area. So, domestic investors continue to remain cautious. But we do see quite a lot of value in some of the beaten down midcaps where balancesheets are reasonably strong. That is where we would focus on at the current juncture.
We have invested in pharmaceuticals, technology, and some auto names. However, currently I like the travel and retail space.
Mithun Aswath, Managing Partner, Kivah Advisors
The panic is not there to the extent what we saw the growth in the first quarter and beginning of the second quarter, we are not able to see that kind of growth for the demand as such. But it is moving in the market place and more hygiene product getting into households or the offices but not the way how people used to buy at a premium in the first quarter or beginning of the second quarter.
K Ullas Kamath, Joint Managing Director, Jyothy Laboratories
We wanted to hit revenue growth compounding at 17 percent, the second is we wanted our profitability to go double digit within 3 years. Also we wanted to diversify away from auto. We have a huge dependence on the auto sector and I don’t like that dependence because of its extreme cyclicality. So CG was perfect from both perspectives.
The performance degraded for all the wrong reasons. We believe that given the environment, the turnaround will take a little bit of time. But we are fairly bullish about getting to good performance numbers
S Vellayan, MD, Tube Investments
We actually saw a positive growth in Q3 2020 (July-September) versus 2019. E-commerce actually has driven growth quite a lot in Q3. Rural is driving growth in the FMCG market in India at this point of time. We see rural growth to 10.6 percent in Q3 CY20 which is phenomenal compared to the metros. Reversed migrants and 83 lakh households got added into the MGNREGA are the factors that led to the rural growth. Alongside that we also had a monsoon which has given boost to the agriculture.
Diptanshu Ray, lead retail intelligence-South Asia of Nielsen
Q2 saw a very healthy performance where the occupancy levels went up to about 57 percent. We see the trend of recovery going on through the month of October as well where the occupancy rates overall were about 65 percent in most of our hospitals. We are seeing the gradual recovery in the non-COVID work across the regions of the country.
Ashutosh Raghuvanshi, MD & CEO, Fortis Healthcare
COVID occupancy across our hospitals hover between 10-15 percent, occupancy has dipped quite a bit with an exception of a hospitals in Delhi. During the peak of the pandemic lot of the people were not opting to get electric surgeries done and were postponing specifically around the cardiac. With time and as cases continue to decline and hopes of a vaccine coming here we expect he normalcy to resume within the first quarter of next year.
Viren Shetty, Executive Director and Group COO, Narayana Health
We are improving in ULIPs from September and seeing growth over last year with market sentiment improving. I don’t think there was much of a difference in new business growth in October. The only thing was that there were some pockets where the lockdown was reintroduced and was stricter. So that was one of the factor where October growth was not much over September growth.
Mahesh Kumar Sharma, MD & CEO, SBI Life Insurance
There is a possibility of higher inventory gains if crude prices remain at current levels. Year on year, if I see November, we should be down around 6-7 percent compared to November 2019 but we need to account for festive timing and assuming that there is not serious scare of further waves of COVID, I think the petrol demand should improve and diesel is improving, but let’s see to what extent.
MK Surana, CMD, HPCL
I see no reason why soybean and sunflower have been left untouched. All oils are interchangeable and our fear is that palm oil imports will go up and soybean and sunflower imports might actually come down. So that looks to be a distinct possibility.
Atul Chaturvedi, Director of Adani Wilmar
The demand uptick in steel has taken everyone by surprise. Steel prices are seeing unseasonal strength, and Q3 earnings are going to be a blockbuster for steel companies. The hot-rolled coil (HRC) is already at Rs 46,500 per tonne on average and I won’t be surprised if it hits a new high. We like Tata Steel and SAIL in the steel sector.
Amit Dixit, Research Analyst, Edelweiss Institutional Equities
(Edited by : Abhishek Jha)