Traditional, safer companies better than new-age IPOs: Helios Capital’s Samir Arora

File image of Samir Arora, Founder and Fund Manager at Helios Capital

It is better to look at traditional, safer companies rather than new-age public listings, according to Samir Arora, Founder and Fund Manager at Helios Capital.

"There is no need to try these new things right now because the new is what is being attacked because the new had a lot of expectations and a lot of money coming in. I think that is getting clogged in the United States and it is just a matter of a few months that it will happen in India where somebody will not get new funding and will have to do a down round, I don't think anybody is buying any of these new-age IPOs for the next week, six months,” Arora told CNBC-TV18 in an interview on February 7.

Arora said he believes 2022 is going to be a tough year to make money. He added that overhang from the LIC initial public offering (IPO) “is something that will impact the market”.

“This year is going to be a tough one in terms of making money. The United States Federal Reserve (US Fed) needs to hike rates much faster. The LIC IPO overhang is something that will impact the market,” he noted.

“In India in the short term, this LIC overhang is there, it is too big an amount for one two month window. Plus, I think that the new IPOs have gone for a six so if that stops the stress in the private market, where many of the companies may have been waiting for further funding or IPO exits, that is going to clog all those guys,” he explained.

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He added that while India may outperform in the near term, higher rates in the US remains a headwind.

“Our top three holdings are – ICICI Bank, State Bank of India (SBI) and HDFC Bank. It is better to look at traditional, safer companies v/s new age IPOs,” he said. He added that the financial sector is doing well and poised to go higher.

Arora also said that he is “positive” on real estate and we may see some valuation multiple de-rating in mid-cap IT companies. He also advised having 8-9 percent exposure to pharma.

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Arora’s statements come amid ongoing investor debate on whether new age IPO investments are worth the money considering market volatility and the upcoming monetary tightening by central banks across the world, especially the US Fed, CNBC-TV18 noted.

Watch the full interview here: