Paint is perhaps the only fast moving consumer good that doesn't have a channel as the manufacturers supply products directly to the dealer and hence it is least affected by the market slowdown, says Pramod Gubbi, Co-founder of Marcellus Investment Managers.
In an interview with CNBC-TV18, Gubbi shared his outlook on specific stocks and sectors.
Speaking on paint and automobile sector, he said, "Paints are not affected by channel financing. In several other sectors, there are three dislocations now. Channels in most sectors are exposed to demonetisation hit, then GST and just when the sector is getting adjusted to the dislocation, the financing crisis has come. But paints stood out in this because there is no channel, it is direct from the manufacturer to the dealer. So, there is not much of an impact."
On NBFC and MSME sector, he said, "There are MSMEs out there that operate on a leverage basis; their hope is that growth will help them service the debt. If growth doesn't come through, their ability to service their debt also goes down and they become fresh NPAs in the system. So, that sort of a downward spiral needs to be addressed through some sort of mechanism where lenders are provided a framework to decide which NBFCs are good and which are bad."
"Our portfolio is largely formed with companies which make goods or services that are essential to the common man. Bulk of the portfolio is formed with consumption or financials, which are more retail on both sides of the balance sheet. So, we are largely exposed to the consumer space," he further added,
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