The bond yield adjustment issue is not completely done with and probably a little bit is left, says Chakri Lokapriya, CIO & MD, TCG AMC. Where within the Tata Group of companies would you be confident of buying afresh?Tata Motors still looks good. At their analyst meet, they had very good plans about the push in the EV space and equally importantly in the medium term just the conventional vehicles for all the good reasons the economic revival the demand will come back. And plus, their debt reduction plan is fairly specific, fairly granular and looks highly achievable. Tata Motors trades slightly at a premium to the BMWs of the world. With JLR plus domestic exposure plus its commercial vehicles--Tata Motors has a long way to go. Some of the other Tata group companies like Tata Chemicals and all these companies are also very well placed, Tata Steel looks very good given the steel demand both domestically and overseas. So yes, all these companies look exceptionally strong at least from a positional trade perspective over the next couple of months. How are you looking at the recent order wins from capital goods and infrastructure companies? Are there any particular names that you would like to identify that you like within the space?The capital goods companies have underperformed the market, the broader market as well as the frontline market over the last many years. These companies have repaired themselves, restructured their balance sheets and are in a far better place than where they were two or three or more years ago. Take Ashoka Buildcon. That company is trading at probably seven, eight times. Sadbhav Engineering is a very clean company with low levels of debt. Then there is PNC Infra. All these companies have order books of about four, five times. The question was whether the order books could convert within the forecast period. With government incentives such as PLI etc and the thrust on infrastructure, it looks like there is a fair chance that some of the order book will convert and that is sufficient for these stocks to go much higher because the valuations are on their side. What about Deepak Nitrite?Deepak Nitrite is a great company. The valuations are again on its side. One of the themes that have ploughed across is PLI benefits for these companies. The interest rates are still very low and economies are opening up simultaneously worldwide, including in India. Deepak Nitrite has a fairly good export order book. All these factors are a tailwind for this company. Company specific factors will only take it higher and the stock looks good even from the current levels. What is your view of the recent RailTel listing?Some of them, including the railway finance company, IRCTC listed at about one times book and for an NBFC and that too with close to zero NPAs, it is a company with a very clean balance sheet which has kind of a sovereign guarantee because various government entities borrow from it. All these companies are unknowns which will start coming into the limelight as the market gains confidence that the economic revival is here to stay. So yes, the space looks good. Is the bond yield adjustment issue done with given that we have had almost a 7% odd fall from the top or could there be more in store?There is probably a little more left and what is important is it does not happen in spurts but fairly cleanly over a period of time because it is not just the level or feel, but it is the pace of the change which causes these corrections. The yield is telling us that this is a market, this is an economy that is picking up and that will create inflation going into the future. That is a good thing because in the last many years, the developed world has been fighting to create inflation so that their interest rates can move from zero to a positive number. Now, it is a question of how the government and the RBI handle it in India. I think they have enough arsenal and they will do a good job. So, I do not think there is much to worry about but yes, there is still going to be these bouts of volatility over the coming sessions.
from Economic Times https://ift.tt/3b7eBW5
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