Portfolio manager, PN Vijay of askpnvijay.com is bullish on Tata Motors and says investors should consider the stock from a long-term perspective. He expects the SAIL offer for sale (OFS) to get a very tepid response.
Portfolio manager, PN Vijay of askpnvijay.com is bullish on Tata Motors and says investors should consider the stock from a long-term perspective. According to him, Tata Motors's JLR business is showing commendable growth in China and other markets.
Vijay is also betting big on Sun TV and feels that the channel's business model is "terrific".
"It has spread its fangs all over the place. Infact, it continues to be the dominant entertainment channel by any count in the four South Indian states which account for about 40 percent of India's television viewing," adds Vijay in an interview to CNBC-TV18.
Below is the edited transcript of Vijay's interview to CNBC-TV18.
Q: The past days have been exceptionally weak for the broader market. What would you do with something like a Tata Motors which has suddenly come down to Rs 270? Would you buy it or wait out a bit?
A: The auto sector in general and Tata Motors surely would merit a buy at some stage. Its JLR business is showing commendable strength on growth in China and other markets. India is not doing too badly either. The domestic commercial vehicle industry has a very strong co-relation to IIP and a slightly less strong co-relation to GDP.
One works on the argument that the IIP is probably troughing out from January-February onwards to a decent figure working towards five percent by the end of calendar year. The benefits of that should flow very systematically into demand for commercial vehicles. So, in the long-term, I am quite bullish about Tata Motors.
What we are also seeing is lot of short selling by speculators in the market in the last few days driven by very fortunate event related news for them. So, we need to see whether we would be catching a falling knife. I would probably give it a day. Normally, I see Indian market change direction on Fridays. So, probably if one gets a change of direction, somewhat late in the trade, one can pick up Tata Motors for investment purposes.
Q: There is an offer for sale (OFS) as well that comes through for Steel Authority of India (SAIL). How do you think one should approach that and what kind of reception do you think it will get?
A: I think I will pass it. I wouldn’t be surprised if it gets a rather tepid reception. The reason is, the price is not attractive to entice people. Secondly, there is a big question mark about the speed with which the steel demand will recover, because the steel industry is very complicated. It has got imports coming in; it depends on Chinese demand, exports and so on. Steel is a ferrous metal. It is not yet on a buy list even for bargain hunters. So, I think the institutions will probably take the same view. It might be stuffed with some other government institution more for fixing the fiscal deficit before March 31 but I don’t think investor interest would be there.
A: Sun TV is definitely an opportunity. I think the business model is terrific in Sun TV. It has spread its fangs all over the place. Infact, it continues to be the dominant entertainment channel by any count in the four South Indian states which account for about 40 percent of India's television viewing.
The North Indian channels find it very difficult to break the language barrier and enter there. So, it gives it a very strong monopolistic market share. Apart from that, its DTH business is gathering momentum. It did have a blip of the local state government in Tamil Nadu trying to nationalise it, but that didn’t go very far.
So, the business model is exceptionally strong for Sun TV. I believe that the politics is wearing it down but I think the family is sort of starting to distance itself from the politics. That’s the sense I am getting from Tamil Nadu. SpiceJet does not fall that much. It is as much a Maran company. In two years from now, I can imagine the Maran family to be totally out of politics. So I think these types of crashes could be used to build into a potential blue chips like Sun TV.
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