Did you manage to glance through the list of smallcap additions in MSCI? I mean, it may just be called smallcap, but these are biggish companies. Anything which catches your attention?
Well, I have not gone through the complete list, but I believe that some of these companies have already had a good run-up and I probably may not want to name the companies with a valuation, but I feel that they have been entered into the mainframe list of MSCI, but they have had their own share of run-up in the market. As I see it, many of these companies probably may demand some amount of inclusion into the smallcap index, but I would feel that here the time is a little bit more watchful, careful.
The market has followed significant amount of euphoria in the recent times and as a result of which their stock prices have probably factored almost FY26, FY27 on the earnings and that is what is required to be a little bit more watchful about because in such situation when you give the forecasted earning, if we take forecasting into the price today which is one-and-a-half, two years from now, even if in this journey if you make some errors or some disappointments in the earnings of the company, probably you will get significantly punished. I think not in the smallcap companies but say for example yesterday the result for Bharat Forge came in, the result for SAIL came in. I guess these companies have disappointed on the agility that they have created in managing the management of these companies I still feel that they have got a good amount of opportunity ahead.
The fact that their growth rate is not going to be superlative, their growth rate is going to be connected with the economic growth rate. So, if the economy is growing at 11-12%, I think GDP plus interest, I would think that many of the PSU companies will have a growth of around 14-15% from here on and there may be some improvement in the margins too, of course.
But most of these particular possibilities today are factored into the price. So, unless we have sharp correction into the stock, probably one is not going to buy into it. I would remain positive about the energy sector. I would remain positive about the metal and mining sector. However, one would like to see the relatively sustained performance on a quarter or a quarter basis for putting more money into them.
What is the way forward for those who are still stuck in Paytm and this at a time when you already have brokerages slashing their price targets all the way to 270 thereabouts?
So, the point is, they have had their business model built on the UPI gateways, wherein they would be acquiring the business transactions and they would be bringing it to the Paytm Bank and that was the model which was working. Now, if the back end, the bank is going away, that means in the front end the UPI transactions, they do not have the money in the business and that is where the bigger challenge is that unless the model gets further revamped, which is not likely to happen in hurry or for that matter if RBI gives them a relatively more period beyond 29th of February and probably allow them to use their entire business model, then things could happen a little better. At the same time, probably I would stay away from putting across any kind of projection at this point of time. Anything which catches your attention in good numbers? This results season, one or two names which stood out in terms of quality of numbers and the outlook in your eyes?
Honestly, many good companies have come up with numbers, but they are not performing. I feel that within the housing finance business, within the consumer credit business, companies like Bajaj Finance has reported good set of numbers. The stock price is underperforming. Companies like Reliance has consistently performed better numbers.
The stock is relatively underperforming. Fortunately, automobiles which were up till now not performing as much as they should have, but some of these companies have started performing well including Tata Motors particularly.
So that is a good sign. But on the other side, Ashok Leyland kind of companies because of the bad stock in their market started going down. So, in my viewpoint, the fundamentals are intact for auto companies. Fundamentals are intact for pharma companies. They are intact for even some of the select companies in different-different pockets, including the finance companies, in banking sector as well.
I think that the issue is related to how much money is getting into these stocks. The momentum money is chasing some of the small and mid-sized stocks, whereas the fundamentally good stocks, they are not expecting enough amount of money. Should they start expecting better money? I would think that these companies which we have talked about could possibly have relatively better performance going forward on the pricing front.
What is the way forward for Bharat Forge now, you think another few odd days of correction and this would become a buy?
Well, yes, one would like to think that way. However, given the kind of guidance which is slightly cautious guidance and given the kind of fact that the stock has already had a run-up, I would think that even if it corrects and recovers on the price on the fall that it has had yesterday, I would still think that it is not going to be a superlative upside as far as the stock price is concerned.
Unless the market catches some euphoria ahead of election, that may be a different issue, but on the fundamental side of the company the earnings and the growth of the company is probably fully factored into the price of the stocks as of today.
Maybe one will have to see how the guidance gets improved in the subsequent year because the business portfolio remains absolutely strong for this company including for defence and that is where probably one would like to believe that going forward the guidance may become relatively strong and they may be in a better position to execute the order book that they have currently got with them.
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