Anshul Saigal sees re-rating potential in Eternal amid margin surprise

Economic Times

22-07-2025

"But generally, we say in the markets that they climb a wall of worry. And if you look around, there's been a fair bit of scepticism built into the markets," says Anshul Saigal, Founder, Saigal Capital.
ADVERTISEMENT Eternal – I mean, the stock moved up yesterday as well, and right now it's almost clocking a 10% move.
Anshul Saigal: Yes, Eternal and the entire space have surprised positively. What has really happened is that there was an expectation of margin contraction due to higher costs, particularly in the quick commerce segment. But in that very segment, we've seen margin expansion for the company, which suggests that competitive intensity seems to be easing. At least, that's what the market is interpreting based on the results. And if that's the case, given the growth – which is close to 130% – it looks like the stock has room for re-rating. It has been meaningfully de-rated in recent times, not just this stock but the entire space. Of course, there's another large player whose results are awaited, so we'll have to wait and see. But the market is already reading into that company's likely performance based on Eternal's results. That's the way to look at this space.
What's your take on the overall market sentiment? Apart from a few earnings candidates that have seen adverse reactions, markets overall seem steady and are finding their footing again around the 25,000 to 25,200 mark. Where do you see the market heading from here, considering that surprises like Eternal's are one-offs? What's the broader sentiment this earnings season?
Anshul Saigal: The earnings season has been quite mixed. If you look at banking, Axis delivered weak results, but ICICI reported strong numbers. Many PSU banks and private banks have shared optimistic forward-looking commentary. So yes, the results are mixed. Even in the consumer durables segment – while cables and wires have done well, electrical consumer durable (ECD) companies haven't performed as strongly. So, the market reaction has been varied.
But generally, we say in the markets that they climb a wall of worry. And if you look around, there's been a fair bit of scepticism built into the markets. Until recently, mutual funds were holding 7% to 8% cash, which has now come down as they've started investing, seeing the market trend. Even when you talk to market participants, there's a sense of caution. That tells you valuations aren't overextended — there's a fair amount of doubt already priced in. And that, combined with reasonably strong earnings, indicates strength in the markets.
How do you view Titan's expansion into the GCC market?
Anshul Saigal: That region has a large Indian population, and most Indians are already familiar with Titan and Tanishq as brands. Damas is also a prominent name in that region. The combination of the two should work well and expand the market base for the company. That said, Titan trades at premium valuations, so there may not be much room for error in this name. The company would have to demonstrate consistent growth for the upside to play out. But purely as an academic assessment, the combination seems quite reasonable.
ADVERTISEMENT Do you think that after ICICI Bank and HDFC Bank's results, there's now a clearer distinction in how smaller banks will perform? Are we moving towards a scenario where the large banks will only get larger?
Anshul Saigal: Broadly, what you're saying is correct – the large are going to get larger. Take HDFC Bank for example – at a 15% annual growth rate, they add the size of a smaller bank to their balance sheet every year. They're already big, and their scale ensures they'll continue expanding.
ADVERTISEMENT However, some of the smaller banks that operate in specific niches can still do reasonably well. Either because the large banks don't compete in those niches or because these smaller banks have better reach in those segments. So, it's not like they'll be wiped out. Some strong players will continue to emerge among smaller banks, while others might struggle. But yes, the larger banks will capture a substantial share of the market going forward – that much is clear.