What do you think about some of these nice earnings? turns. Well, we knew it was going to be a very strong quarter given the heatwave, but the business has clearly surprised us even more, like Jubilant Foodworks, where the overall comparable price growth was just 3%, but what has got people excited is that maybe the decline has stopped and a turnaround is now coming. Any comments on some of these urban discretionary investments?
Deepak Shenoy: I haven’t seen the results of Voltas. It’s interesting because there was a heatwave and India needs a lot more air conditioners. So the fact that even a 28% GST doesn’t deter them is good, but at some point we will realise that we can’t have heatwaves like this. There are countries that are warmer but they have a lot more air conditioners, so it’s positive for the long-term future. We don’t have this. stock In our portfolio, but the entire space is interesting. For Jubilant, it is a relatively expensive stock. So, even with the earnings that have come in or with the turnaround in this, I would say that it is just still a little bit off our radar in saying that we cannot, if these valuations were to fall to about 30 or 35 times earnings in five or six years, I don’t think this would be a meaningful return on investment from now on despite seeing the scope for growth being quite good. I don’t see them growing at 50% to 70% CAGR from now on for the next five or six years. So, I am not really interested in Jubilant Foods per se. What would you do with these stocks if you had missed the rally and hadn’t bought, say, the… Exide And the Amara Rajas of the world, would it be better to simply stay on the sidelines and not participate at least at the current levels?
Deepak Shenoy: So, we are owners Amara Raja I’m not too unhappy with the decision. We’ve had it for a while, but I still think it’s a pretty interesting move in a game-changing area.
The battery is becoming one of the most important parts of a car, instead of just being a small item of Rs 7000 or Rs 10,000 or even Rs 5000 inside a car, you will see that it is a substantial part of the cost of a car and if you have a network that Amara Raja has, and so does Exide, for example, and there are also the OEM tie-ups that they have or are building, plus they are moving into EVs in a slightly different but better way.
I would say that in the long term this bodes well for us. In the short term, markets can be very volatile and very punishing, especially if the broader markets fall.
So, I would say if you have a five-year horizon, you might want to consider buying these stocks in small amounts over a long period, and that’s exactly what we’ve done.
I think we have been buying shares in this company for the last two years. So that would be the best way to go, I don’t want to say that today it’s an investment and let’s look in three months, it’s a longer-term story. It will evolve over time.
What other additions have you made recently? Is there anything new you’ve added or are considering?
Deepak Shenoy: We haven’t decided what to add yet. There are still some results pending, but we remain excited about many of our great works. I think LIC In itself, this is one of our biggest bets, and next year onwards they will see an increase in revenues from the fourth quarter onwards because their share of participating policies increases from 7.5% to 10%.
I think that will be adjusted a little bit and, in addition, they have increased their holding in non-participating policies to 25%. A year ago it was 10%. So, I think we will continue to build on that position. We have not added much more; in fact, in the run-up to the rally in the last few months, we have actually reduced some of the public sector stocks that we had, mainly because they became too big, like some of the RVNL and maybe a Mazagon Dock because positionally they had become too high.
But we are waiting to deploy the cash. There is very little cash, but its deployment for new stock has not yet occurred this quarter. Hopefully, next time I will have something better to update.
I’m curious if you noticed. ONGC Timely or not, there are quite a few triggers at play right now.
Deepak Shenoy: No, not really. We still have plenty of time. Dependence In that sense, we will benefit if the windfall tax is reduced, but not the other one, which was the rate increase that they could do. I don’t think that will be a reality because, in the end, if that means that you and I have to pay more for our gas consumption, that will add to inflation and that has a political problem.
So, I don’t think they can do it, but the windfall tax has a bigger impact. So, we don’t have ONGC at least in the core portfolios. It has been part of our momentum portfolios, but that is more based on price than on the fundamental action.
I don’t think we’ve missed it, but I’m sure you can’t get all the parts of a rally, so you’re only going to get maybe 30-40% of any big move that there is.
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