“Stay away from new age companies like Policybazaar, Paytm and CarTrade. Zomato is a different company. It is part of a duopoly in a market where takeaways are a reality. They will remain and grow. Now the management needs to stop doing random acquisitions and investments and becoming a private equity company. “
“The key challenge for is to re-price their liabilities in a tightening interest rate cycle in the sense of building the retail deposit franchise. In a loose monetary policy scenario, NBFCs are well placed because it does not matter whether you have a CASA franchise or not, but when things start to tighten, that is where your own deposits become more important,” says
Sandip Sabharwal, asksandipsabharwal.com.
What is the outlook on Bajaj Finance and ? JPMorgan has upgraded Bajaj Finance to overweight.
Results were good. They were better than expectations and the good point also was that for Bajaj Finance, the NPAs were well under control and the write offs were lesser than what the analysts were expecting. That gave a boost to the stock which had been underperforming for a long time.
It had some move prior to the results but generally it underperforms. So I would think that the result reaction is through now and it will behave in line with the overall markets. The key challenge for Bajaj Finance is to re-price their liabilities in a tightening interest rate cycle in the sense of building the retail deposit franchise. In a loose monetary policy scenario, NBFCs are well placed because it does not matter whether you have a CASA franchise or not, but when things start to tighten, that is where your own deposits become more important. It will be a challenge which it along with all the other NBFCs, is likely to face over the next year or so.
What about some of the new-age tech plays? What would you advise people to do at the current juncture with the likes of Policybazaar, , and CarTrade? What is the biggest concern right now?
Three of these companies are easy to call. Stay away from Policybazaar, Paytm and CarTrade. Zomato is a different company. It is part of a duopoly in a market where takeaways are a reality. They will remain and grow. Now the management needs to stop doing random acquisitions and investments and becoming a private equity company. They need to focus on their core business and improve cash burns and profitability there.
If they can do that, then at some stage, the stock will perform. Now timing is the issue and for that, as long-term investors must watch out for a few quarters and see what is happening and then take a bet even if the stock is a bit higher from the current levels. But there needs to be clarity.
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I don’t want to see these stories because
I know you do not buy stocks just because they have fallen so much and they have become cheap, you got to monitor what the earnings are, what the management focus is now and whether preserving cash is that changed mantra or not, prima facie at what level would you say there is not much to lose from here?
There’s not much to lose. It depends on how much you invest so the stock price by itself does not matter. If I put in Rs 1 lakh into Zomato, then it can lose one lakh if it goes to zero. So, it depends on how much you allocate. For people, who just look at the price, who think that the stock was at Rs 170-180 and now is at Rs 40-45, with a good business profile it should do well. They can allocate money but it depends on the allocation
So they should allocate maybe a couple of percentage of their overall portfolio and take a bet. Even if it does not perform, you do not lose too much.That is how you have to do it. Otherwise purely on price, it is very tough to predict because till they did not acquire Blinkit, the stock was at a good level. Blinkit has opened up an entire new area of loss-making business that they need to invest in. How that goes, we do not know.
We were talking earlier about how this is going to be the second best expiry perhaps in the last one year with a gain of almost 7.5%. We have seen some positive rollovers in the likes of banks etc despite a 15% up move in PSU bank stocks. Is there any name from the PSU banking space apart from ?
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