Porinju Veliyath, Managing Director of Equity Intelligence
Public issues planned by Mamaearth and OYO seem to be risky propositions to Porinju Veliyath, Managing Director of Equity Intelligence.
In an interview with Moneycontrol, Veliyath explained his stance and said he would prefer companies in the secondary market and doesn’t see deep value in new-age companies such as Paytm and Nykaa. Excerpts from the interview:
Any stock in 2022 that you regret holding or selling?
When we do smallcap investing, mistakes are bound to happen. That's why there is more risk and more return in that strategy and we are still doing it, even though we have some large midcaps and largecaps sometimes. We don't regret anything.
One stock you were better off not holding in 2022
Everything was good in 2022, to be very frank. Raymond is the stock I'm very proud of… I still like this business. It is valued at around Rs 10,000 crore to Rs 11,000 crore. I bought this stock only because of this high valuation.
Manyavar was planning an issue at Rs 20,000 crore valuation… I think today it is around Rs 32,000 crore. So, Manyavar is not bad. Even those who bought it later are making money. But when I compare it with Raymond, I would prefer Raymond, even today, on a valuation basis and the potential for future wealth creation.
Staying on IPOs – Mamaearth and OYO. Which is better between the two
Neither. I think it's risky. Would rather look at the secondary market, listed companies.
Is Nykaa going the Paytm way? It’s almost 67 percent lower from its high. In the same category, are there any other stocks that would be risky?
I’m not knowledgeable enough to, you know, analyse these two companies or make a comparison. I know generally what they're doing. But valuation-wise, both the companies are well-priced today, I would say. I don't see any deep value in them. Maybe equal in that aspect.
What about the less-risky bets in that category?
Tata Communication is a technology company. They have been into voice and data infrastructure. It is my second-largest holding in portfolio management. So, I would prefer this compared to some of these technology companies coming out with IPOs. This looks safer to me.
But investors should be careful before investing. I'm not making a recommendation. We have been buying this stock for the last two or three years and are very comfortable. We continue to hold. It looks like a safe bet among technology, among new-gen businesses.
Other than their legacy business, Tata Communication is venturing into all the new-gen futuristic technology businesses/solutions, global solutions. I think this is a stock to watch and investors should be exploring it further.
Of these three themes – defence, infrastructure, and railways – which looks interesting to you?
Infra is more interesting. Defence, of course, already had a big run on a comparison and on a valuation basis. Some of the infrastructure companies, many fund managers have been talking about it, many mutual fund managers are buying. So, I think they have been suffering in the last 10-15 years and people were selling off those companies, and some of them are available at very reasonable, attractive valuations. And we are talking about huge capex, private and public, in infrastructure… I feel infrastructure is preferred among the three at current evaluation.
Within infra, what's your preferred segment?
Infra in general. Actually, we don't have super-specialised large infra companies. Now Larsen & Toubro is doing everything… We have a holding in Jai Kumar. It has always been at low valuation because of the perception in the market. But they're doing a good job. I think it’s a significantly large company with a strong balance sheet.
If not a wealth manager, what would have been your career choice?
I am a half-farmer right now. So I would have been a full-time farmer. I love farming and I spend a lot of time on that.
What's your stress buster?
Farming, again. Yeah. I live in Cochin. And after a decade of my career in Mumbai, I left the city in 1999. And you go for the weekend to the village, where your birthplace is, your native place. So that kind of lifestyle is so relaxing in today's busy world. I'm enjoying it and that's really a stress buster. I do work on my farm.
How about your market guru?
Chandrakant Sampat used to be my market guru. I had the privilege to interact with him… I have had more interaction with him since 1993 when I joined Parag Parikh Financial Services. It was Parag Parikh Securities then. So, he used to be in the office every day. He would talk to me about Nestle, Indian Shaving Products, which is today's Gillette, and Colgate. He used to make me buy shares for him. I used to go to the trading ring in those days, representing Parag Parikh.
I learned a lot from him, but I used to disagree with him in a big way because I had a gambler's mind. A little trading kind of mind. I used to enjoy it… I get a kick out of doing speculative trade. I love that. I still do it.
Given your love for speculative trading, is value investing your strategy, or is it growth investing?
Value investing. I strongly believe in that. That basic discipline of investing is required. When I talk about trading or speculative trade, it's one aspect of my life. But our focus as an organisation [is to] create [wealth] through the bottom-up approach, identify smart companies which can grow very big in the future, which can be multibaggers. So the structure of the Indian economy is… helping that kind of investment strategy. So we believe and we continue with that kind of value investing strategy.
Three stock ideas that you'd like to recommend
My top three holdings in the equity intelligence portfolio are Raymond first, Tata Communications and Hindware. So, we still believe in this story and these are our holdings. We may sell at some point of time. So there is no point in investors just betting on these three companies as it is, but explore, study about the valuation…
If there is a company which is perfect, wonderful promoter, highly ethical – like a Narayana Murthy kind of a promoter – and excellent industry, everything is fine, it's going to be big growth… then I will not invest in that company. Because then that stock will be already priced to that level and there is no fun in doing it.
