Investors buying consumer durables growth story:Nirmal Bang

Anuj: What about the market is that is also looking tricky? You had your Singapore and Hong Kong trip with investors how was that? What is the feedback?

A: We met about 20 clients over 4 days and a lot of people felt 9,000 probably came too soon. I think it was correlated with the fact that the expectations from the government were probably far exceeding what actually went on, on the ground. However, the general sense we got from, and we met funds from, how manage about USD 150 to USD 15 billion in India. The average sense we got is probably the Nifty will consolidate between 8,400-8,500 on the way down and about 9,000 for the next 4-5 months. So I do not think anyone is expecting a tear away correction or absolute breakdown on the market just may be a sleepy mode for 4-5 months till actual earnings upgrades kick in closer to Diwali may be.

Ekta: Pharmaceuticals still continue to gain despite the valuations they already trade at. If you have to say buy into a Lupin versus a Natco Pharma which one would you choose and why?

A: Both from the largecap and the midcap space, a lot of the clients that we met at overseas we asked them where would you basically put your money and they said we want to look at companies and stocks that have earnings growth. Anything interest rate sensitive or industrial related right now is not giving them the confidence which is why you are continuing to see consumer and pharma valuations far exceed the valuations of anything else in the market at this point in time. The stocks are not correcting. I will jut give you a case in point Bata. The last quarter results were bad on the stock but the stock did not fall. So people are sort of buying the growth story on FMCG and pharma.

To your specific question we have been historically positive on both and we continue to be positive on both. I do not think it is a neither or, or story. However, Natco with the run it had off late at Rs 2,000 plus with the immediate short-term I do not think you will get too much but I retain my bullish stance over longer period of time.

Anuj: Any fresh stock idea that your team has come out with because we have discussed a lot of stocks with you in the past but anything fresh that looks interesting?

A: It is a tricky situation because when you go to the fund management community today they will ask you give me a 20 percent return on equity (ROE) company where there is a 15 X multiple and those are not easy to find. So it makes life of brokers very tough in that respect. We are in the process of working on a couple of ideas around the urban discretionary side. We have discussed Jubilant Foodworks extensively in the past.

There are two stocks we are looking at with some interest but we have not initiated yet one is IFB Industries and the other is Westlife Development. Those are two that are looking pretty interesting from a longer-term perspective because whatever channel checks we have done from consumer related companies we found that the urban discretionary part is not doing badly. It is the mass market consumption that as actually suffered. So any kind of correction you get in stocks like Jubilant Foodworks or anything discretionary like an IFB or perhaps even a Westlife Development those are interesting ideas getting into from a long-term perspective.