Market expert Deven Choksey has advised a cautious, 'wait-and-see' approach on InterGlobe Aviation and Kaynes Technology shares, citing significant uncertainties for both companies. In an interview with CNBC TV18, Choksey, Managing Director at DRChoksey Finserv, also expressed skepticism about the long-term viability of business models in the quick commerce sector, including the newly-listed Meesho.
Regarding InterGlobe Aviation, which has seen its stock fall 20% from its peak, Choksey highlighted several moving parts that make predicting its performance difficult. He noted the company's recent quarterly losses and the uncertainty surrounding the financial impact of a potential penalty. "The worst is still probably not over," he stated, pointing to structural changes being enforced by the government that could have a "telling impact" on the airline's operations. While the company may be able to charge premium prices on its exclusive feeder routes, a potential 10% loss in market share on main routes presents a significant challenge. Given these variables, Choksey is withholding a definitive view until there is more clarity on the company's revenue and cost structure.
Turning to Kaynes Technology, which experienced a sharp price drop followed by a 13% recovery, Choksey remained wary. While the company has clarified that an accounting error occurred, its impact on the profit and loss statement is not yet quantified. "This is not going to be taken very easy," he warned, emphasizing that the stock already commands a premium valuation. He suggested that if the profit picture is marred for one or two quarters, this premium could be at risk, leaving little margin of safety for investors. Consequently, his advice is to wait and watch for some time.
Choksey also analysed the quick commerce space, starting with Meesho's market debut. He argued that the company's business model is missing a competitive moat, as it relies on advertising for revenue rather than charging commissions. Its focus on Tier-2 and Tier-3 cities with affordable brands makes its growth trajectory uncertain. "I don't see any immediate change in the business model happening for this company," he said, suggesting a lack of immediate upside despite potentially cheaper valuations on a price-to-sales basis.
More broadly, on the quick commerce sector including players like Swiggy and Blinkit, Choksey agreed with the sentiment that the current level of cash burn is unsustainable. He cautioned investors to be mindful, stating that while gaining market share is one aspect, achieving profitability is paramount. "Today, at the market cap valuation that you see for these companies, they are richly priced," he observed. Choksey calculated that justifying these valuations would require significant profit generation, which he does not foresee in the next three years. He concluded with a memorable piece of advice for investors: "As a consumer, you enjoy their services, but not as investors."
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