We are walking into 2020 with a lot of positive perspective, said Nilesh Shah, Managing Director and CEO, Envision Capital.
“We think that a lot of pain is behind us. In 2018-2019, the kind of pain that was there - not just in the economy but the broader markets, I think that is by and large now behind us, and we are looking at 2020 with a lot of more optimism than what it has been over the last two years,” he said.
“If we have some solid news on privatisation; one or two large big bank privatisations happen – that will be a huge positive. Also if there is a progress on power sector – that itself could mean a lot,” said Shah in an interview with CNBC-TV18.
According to him, if there is strong momentum on the public investment plans that were unveiled just 48 hours ago, then that itself could lift demand for a lot of things. "Demand may not necessarily be with the consumer goods sectors but even some of the core sectors may end up doing a lot better," he said,
Shah added that with the upcoming Union Budget, lot of expectations are getting built-up and if something like long-term capital gain (LTCG) tax goes then that would provide a huge fillip to the market,” said Shah.
He further said that a lot more needs to be done in the housing sector to boost demand. “Whatever measures that are being done are more in terms of funding stuck projects; projects which are stuck or not moving. I think that addresses the supply side, but one needs to really address the demand side issues,” Shah mentioned.
On the various sectors, he said, “The healthcare sector is good, but the big challenge is that it remains capital intensive kind of an industry. So if things like investment thrust etc., come in a big way, then the whole business model will become relatively asset light, and so demand will remain strong.”
“However, between the two that is healthcare and diagnostics, I think diagnostics space looks relatively better, because you can run that business and grow it, without needing too much capital," said Shah. So the diagnostics space is like a typical service industry, whereas the hospital business remains a very asset heavy business, he added.
Concerning stocks, he said, “We own stocks in TTK Prestige, and we think that valuations have become a lot more reasonable there."
"This year, they have guided for a single-digit growth keeping in mind the consumer sentiment but we have to keep in mind that we are at the worst point in terms of sentiment, and over the next year or two, if sentiment grow back – these are businesses which have the potential to grow in double-digits, and within that these kind of players are leaders,” Shah further added.
According to him, auto ancillaries look better compared to auto original equipment manufacturers (OEMs).
When asked about a comeback stock in 2020, Shah said, “I am not too sure about specific stock but 2020 could be a big comeback year for the midcaps."
"The midcaps have languished for about two years in a row and I believe that 2020 could be a year of the midcaps. The midcaps will come back with a very strong vengeance. So that’s what I would bet on for 2020.”Source: CNBC-TV18