Hard time for interest sensitive sectors: Ambit Cap

Excerpts from CNBC-TV18's exclusive interview with JP Sinha:

Q: Important numbers today. What's the sense you are getting as you walk into the last day of earning season? What are your key takeaways?

A: Broadly the numbers for Q2 has been inline in fact there are surprises, which are slightly on the weaker side but very few positive surprises however the numbers are predominantly good from capital goods, engineering, banking has posted decent set of numbers, small and midcap companies where the largecaps hasn't done well they have done well but broadly they are inline with estimates and we haven't seen much of a need to either raise our EPS estimates at this point in time or even take it down further but broadly inline.    

Q: What has your key takeaway been from the Credit Policy and how would you approach sector like the autos now?

A: Liquidity is the prime concern, which may exert inflationary pressure at this point in time, and the few tools, which are available with RBI, they have utilized them most judiciously. CRR hike obviously will have its own impact on the amount which is left with the banks to lend because if one adds 7.5% of CRR and 25% of SLR that leaves 1/3rd not to be lend as per what one want so one is left with 2/3^rd and so that 2/3rd one has to add judiciously.

So I don't see interest rates to come down in near future though the liquidity continues to be high but auto or other sectors, which are interest rate sensitive for them, it will continue to be hard time.      

Q: Bharti and RCom announce results today. What is your call on how to play yourself in the sector?

A: As we have mentioned that we are not tracking the segment but purely based on my understanding of the segment and these companies; I still feel that once the value added service becomes much more visible the decline in ARPU which we are witnessing for quite sometime, the fall would get arrested to some level however we expect margins to come little bit further down.

Having said that we are positive on the entire segment. Though both are good but between the two RCom is where the growth is much more visible, much more steeper than what it is for Bharti Airtel because it has gone through its J-curve and Rcom is slightly behind and its on growth path.

Q: You do track real estate though between Puravankara , Unitech, and DLF what have you liked?

A: We had mentioned earlier also that we like the companies where projects are much more visible and we value the company based on their NAVs and based on that what we find is possibly DLF and Unitech are better ones but now they are trading at a significant premium to their NAVs which is almost in the range of 20-30%. I would have my own reservations at these levels of the stocks so I would rather not be a fresh buyer at these levels 

Q: How do you position yourself on the fertilizer lot, we haven't seen too much by way of earning as per the stocks have begun to move again?

A: Fertilizer is not something that we are betting on and whatever movement we have seen has nothing to do much with the fundamentals so I will still not bet on the fertilizers.

Disclosure:

I do not have holdings in the any of the stocks/sectors spoken about