Market Watch | Jigar Mistry, Co-Founder, Buoyant Capita on:
IRCTC
Over the last week or so the small cap index correct by around 8 percent and the Sensex has been down by 1- 2 percent or so. If you look at BSE 500 names, some 30 odd stocks are down 15 percent or more in the last one week or so, but down only 2 percent over the last one month. “So excesses do get built out and eventually they get taken out very swiftly as well,” said Jigar Mistry, Co-Founder, Buoyant Capita.
“IRCTC we have owned it, we had actually first bought it when it was Rs 1600 and we continued to own some parts of the quantity, because the run had been just too sharp for us to justify continued ownership in that name. So, we have sold out the majority of that position, some miniscule positions to hold on but again, this is not a fly by night company which will generate something like Rs 1,000 crore in fact a year down the line,” he added.
And there are optionalities in terms of how you know the payment gateway for this will get taken care of besides the other benefits, like the PNR would start getting built now as individual passengers, the water prices would increase essentially. So it’s a decent stock to own, just when the valuation get too much, we cannot keep holding them. So we hold a miniscule quantity, Mistry said.
At current levels of Rs 4,250, are valuations fair, can it be justified to continue to hold on?
Yes. The current price is not that excessive. Over the last two or three days, this was among the top traded stocks, which means that a lot of people might have got worried and sold out of this name. So incrementally, once the business fundamentals take on, it could be an interesting bet, he said.
Banking, insurance, metals
“The sectors that we like are banking, insurance, metals, chemicals, very selective IT and some reopening. Banking we have argued in the past that Sensex and Nifty — broader markets have moved to a higher level, people kept on worrying about the banking system and once ICICI came out with the reserves some part of that was gone,” Mistry said.
So going forward, he thinks all the banks that can report reasonably decent growth and control the slippages and asset quality will get rerated.
The ones he continues to like are ICICI Bank, which has been his top holding but also SBI, Federal Bank and Canara Bank.
“In insurance we have like Max Financial, although that sector has corrected and SBI Life Insurance makes a lot of sense as well. But we own Max Financial,” he added.
“In technology, I think, you know, with the numbers that have come out, we are fairly certain that there is no problem with demand but the margins is something that needs to be taken care of, and when they are trading at that all-time highs one needs to be wary. So the ones that we own are Eclerx Services and Cyient,” he said.
From reopening space, Mistry likes Welspun, India Pokarna and SIS.
In chemicals, commodity chemicals got rerated. He believes one needs to take a step back there, understand on how the incremental businesses are getting driven. So the ones he likes and owns are Gujarat Flourochem and Sudarshan Chemicals.
