“I believe this is one of the best times to accumulate great business, the stock doing all-time high, with the best QoQ and YoY numbers, with a turnaround story will make the best returns of all,” Rohan Mehta, CEO and Portfolio Manager at Turtle Wealth, says in an interview to Moneycontrol.
He believes that there can be two to three months of consolidation, and then we will see a bull run trajectory.
With 16 years of experience in the financial world, including 15 years of experience in managing more than $100 million assets, Mehta says that in the healthcare sector, MNC can be a very good bet to go ahead with as the valuation becomes better, but IT space still required two to three quarters to create great value, after that, it will be an interesting way to look at it, where the value will be higher than the price.
Do you think currently the healthcare sector is the cheapest in valuations terms?
Healthcare is a better space for an unlisted player than listed players, but if we see healthcare as a space on the listed side we still believe it's not cheap, as the competition is getting heavier and heavier. And the startup ecosystem is outperforming the mature players, as we believe to be out of the healthcare segment as of now, sometimes low valuation also suggests that the growth is not there in the sector and when growth doesn't come PE expansion is very hard to be done. In healthcare, MNCs can be a very good bet to go ahead with as the valuation becomes much better.
Is the opportunity emerging in the IT space now?
IT still required two to three quarters to create great value, after that it will be an interesting way to look at it, where the value will be higher than the price. Still, we believe IT midcap has great value, and a company like Persistent Systems, KPIT Technologies and BLS international becomes our top pick.
Will the rate hikes by central banks continue for longer?
I think we are near the pinnacle; we can't afford to accelerate the rate higher than what we are with a growing economy. There is still space for 50 bps this year. More rate hikes will give a hit to capex plans, which most of the brick and motor companies have done, anything in excess is not great, and a rate hike like this is also not invincible.
Have you seen any earnings disappointment in the current calendar year?
In December FY23 quarter earnings were very subdued, QoQ and YoY both were major underperformers. We believe the second quarter will have better numbers than expectations, as the Covid-19 factor will be out of QoQ and YoY, and eventually, it will be a standalone performance that will be reviewed.
On every one stock which gave an outperformance QoQ and YoY, there were nine which underperformed.
Are the valuations attractive enough in the consumer durables space?
We believe that valuations are not cheaper, the margin and volume business is prevalent, and there is no new thing where the PE can be re-rated, so in that zone, the valuation of most of the consumer durables is getting expensive. When a company is a clear cash flow maker with a great brand, it is the consolidation and will consolidate for a longer period of time.
Also, let's not forget that consumer durables has been around 10x in the last 10-12 years.
What is your take on equity markets given the current global environment?
I believe this is one of the best times to accumulate great business, the stocks are doing at an all-time high, with the best QoQ and YoY numbers, with a turnaround story will make the best returns of all.
It's the sixth quarter of consolidation. After every big consolidation, we see a great bull run. We believe still there can be two to three months of consolidation, and then we will see a bull run trajectory.
Are the valuations looking attractive in Adani Group stocks after a sharp sell-off?
It’s a clear point that there are issues in the company, the stock can't tank 50 percent just because of a report, and for the stock to come back is like 1 in 100 possibilities. Also, big value destruction has happened in other Adani Group stocks.
I am still at 200 PE, with a debt of Rs 1,200 crore. PAT of only Rs 500 crore, but a market cap of Rs 1 lakh crore. After my price crashed to 75 percent, who am I?
Adani started to make people feel that it was unstoppable but let us not forget unstoppable is a great song, not a fact in markets.
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