Finding good amount of opportunities in auto space: Deven Choksey

In an interview to CNBC-TV18 Deven Choksey, MD, KRChoksey Investment Managers shared his reading and outlook on the market.

Below is the verbatim transcript of the interview.

Anuj: Are you still generating enough investment ideas at these levels or do you think it is time to move some money into cash?

A: The ideas are many, opportunities are coming along. We are seeing a lot of opportunities happening in some spaces like the electric equipment suppliers who are basically driven by the larger amount of order book in the visibility of revenue going forward in next two years’ time. So certainly, this is one space we feel more comfortable. We are equally feeling more comfortable about the broadband space in which the fibre optic, fibre optic cables, the integration of networks where largely the telecommunication or the networking industries are moving ahead. So that space is reasonably looking good.

We are finding a good amount of opportunities even in the auto space. Some of the large auto companies are available at a valuation which is at a discount to the market valuation. At the same time, the growth in them could be seen easily at around 20-35 percent.

Many of the banks – we feel – are giving an opportunity particularly in the public sector space where the valuations have still been under control, they have not moved at all probably. So some of the banks could be a good opportunity. Commodities space, cement looks distinctly positive going forward as well. So many of the companies give you the opportunity maybe through valuations you might find respective opportunities emerging faster in the companies. I think the market probably will give some correction in between and that could be a good opportunity to buy into some of these identified areas that we have spotted.

Latha: Some of the stocks were run up considerably. For instance Biocon’s Syngene and then on the more midcap space, Indiabulls Realty, all those numbers have come, any of them you think have marched ahead too much, any caution or would you still buy some of these?

A: Not that I could spell out for every company as to where exactly valuationwise they are adequately priced or they have moved ahead of time etc but my reading says that in this market condition, when you have got the higher amount of buying appetite into the system, you will have to keep looking at the directional calls more than the valuation. I do agree that in some cases, the valuations will have to get adjusted, maybe if not the price correction, there will be a time correction that one will have to look for.

If you have spotted the right opportunity directional call is right then probably according to me, you would eventually make money out of this market. So we focus more on that particular aspect. I have not seen couple of names, which I have mentioned just now but I do believe that companies like Sterlite Technologies came up with the results and I think the results came up distinctly positive. We feel that the opportunity is becoming larger in this kind of a space where the entire fibre optic play is becoming larger plus the company has integrated themselves into the IT space significantly. So they have the defence business to talk about, they have got the networking business to talk about, smart cities business to talk about. So we find that such companies are giving you opportunities and particularly when the market gives you correction -- correction -- that is the time when one could probably enter into this stock.

Anuj: I wanted your thoughts on couple of stocks which will react to earnings today, Biocon and Ujjivan?

A: I haven’t gone into the detailed aspect about the current earnings on these particular companies and probably how they would figure it out as far as the quarterly performance is concerned but I do believe that as a space, they are doing reasonably well. Not too sure whether one would like to buy them at the current valuation particularly to Ujjivan, according to me the stock has probably run up ahead of times and I feel that one will have to wait for buying into some of these names.

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