“When a sector is no longer fancied, that gives an opportunity. Among the larger companies, does seem to have value as it has the potential of giving double digit returns over the next one year. ICICI Prudential Life also got sold out very substantially right from Rs 620-630 odd to Rs 460 in a straight line. At these prices, even there I see value,” says Sandip Sabharwal, asksandipsabharwal.com
The insurance space has been doing nothing for the longest time. has been one such idea which has been around the Rs 600 mark. Do you think finally it is time for the insurance space to breakout because fundamentally, the space is quite under penetrated?
Actually the under penetration story and growth story was always the story in insurance and it is not a new story. It is just that over the last one or two years, people have realised that the kind of value accretion that people thought could happen in the insurance companies is not happening and that has led to moderation in the valuations.
From being a very fancied sector, it is no longer a fancied sector. When a sector is no longer fancied, that gives an opportunity. Among the larger companies, HDFC Life does seem to have value as it has the potential of giving double digit returns over the next one year. Life also got sold out very substantially right from Rs 620-630 odd to Rs 460 in a straight line. At these prices, even there I see value. There is value in two-wheeler companies for sure.
Do you look at Bikaji Foods? The stock is up around 10% today. Do you see value in that one and the entire QSR space?
There is no value in Bikaji Foods. The entire speculative activity in the market has shifted from the new generation technology stocks where people have lost a lot of money to these newly listed companies. Any long-term investor should just ignore these moves.
has seen a pretty strong yield. The demand has been healthy, costs have been lower and analysts believe we will have a nice profitability surprise on the upside. What is your outlook on this candidate as well as the entire hospitality space?
I am very bullish on InterGlobe Aviation and that is something which we entered a bit lower because in my view the fear in the minds of many investors about competitive intensity is overblown. They still hold steady, their balance sheet is the best in the industry and both and GoAir are facing their own issues.
« Back to recommendation storiesThere is obviously a renewed threat from Air India-Vistara combination in terms of the promoters having deep pockets and them becoming more aggressive but that could be more on the international side. So, overall the InterGlobe story is strong; the worst seems to be over, yields are holding up, fuel prices could be trending down and international travel also could be picking up.
What is your outlook on the entire pharma space?
Pharma does not have a big overall story so it is not a theme based story at this stage. Some of the smaller companies which were fancied earlier are facing margin and balance sheet pressures while some of the larger ones like and are still doing well. If people need to have an exposure, they need to be very selective here and just focus on these large companies.