According to Gautam Trivedi, the slowdown in spending is likely to continue. The best place to invest now in the Indian consumer space is the Indian FMCG space versus the foreign MNC FMCG companies, he adds.
Religare Capital Market’s fifth Consumer Survey is currently underway. Speaking to CNBC-TV18’s Sonia Shenoy and Latha Venkatesh on the sidelines of the conference, Gautam Trivedi, MD and head of equities-India, Religare Capital Markets spoke about the key takeaways from the conference and the right stocks to bet now.
According to Trivedi, the slowdown in spending continues not only in urban areas but also, in rural areas. The best place to invest right now in the Indian consumer space is the Indian FMCG space versus the foreign MNC FMCG companies, he adds.
Below is the verbatim transcript of Gautam Trivedi's interview on CNBC-TV18
Sonia: What are the key takeaways of the 5th urban consumer survey? What stocks are you recommending now?
A: The underlying theme that has emerged from our consumer survey which was conducted over 1,000 people across the country, the first conclusion is that unfortunately, the spending slowdown continues and so, we are not seeing any pick up in that. Secondly, even in semi-urban and rural areas there is a slowdown in spending which is unfortunate, but that trend is clearly emerging now.
There are lots of details that we can share with you in the report, but the overall riding theme is that this slowdown continues. In the wake of that, we still think the best place to put your money in the Indian consumer space will still be the Indian FMCG companies versus the foreign and the MNC FMCG companies.
The reason I say that, we did analysis of the performance of the PSU 200 over the last 10 years. What we found is the Indian FMCG companies actually performed significantly better than Hindustan Unilever (HUL) and the ITCs. For example, over the past 10 years in India at BSE-200, TTK Prestige was number one stock, up almost 20x followed by stocks like Emami which were up about 4,000 percent. Our money would still pretty much be with the Indian names at this point versus the MNCs.
Sonia: What is expected from the Religare Consumer Conference? What kind of interest and what concern does this sector has now?
A: In our conference, instead of having the regular listed companies, we have a few of them, but the objective has been to understand the back end as well. For example, we have got about 4 unlisted companies and 4 listed companies. One of the interesting unlisted companies that we have is StarAgri. This company runs one of the largest private sector warehousing projects in the country. It has 700 warehouses in 16 states with a capacity of over a million tonnes. So they directly procure it from the pharma, warehouse it, sort it, grade it and then send onwards to the big MNCs like ITC, HUL and Britannia and that is really the difference we are doing at this conference.
We are getting in unlisted companies who are talking about their business and do not have any quarterly numbers, so they are giving a very different perspective to overall consumer business.