Latest news with #DipanMehta
Economic Times
2 days ago
- Business
- Economic Times
Stay put if you already have defence & railways stocks but avoid fresh investments: Dipan Mehta
Dipan Mehta, Director, Elixir Equities, says defence sector earnings have been strong, attracting investors and momentum trading, but valuations appear stretched with potential execution challenges. While railway stocks are rising in sympathy, government expenditure remains stable, and some companies have reported disappointing results. Existing investors may hold, but fresh investments in both sectors are not recommended due to valuation concerns. ADVERTISEMENT I want your view on the overall market yes, of course, but select packs in the market are once again gaining some steam like railways and defence. These are themes that had seen a runup, then cooled off for a bit and they have started spiking again today. Do you believe this is the beginning of another leg of spikes or do you believe it was just a one-off? Dipan Mehta: It is a continuation of the momentum which we have seen in these companies over the past few weeks or so. If you analyse the entire earning season, the best sector has been defence, not as much railways, but defence certainly has come out with flying colours and that is why investors are getting focused over there and a lot of momentum trading is also taking place over there and a lot of retail traders have entered these counters, I think the valuations are a bit stretched at this point of time. No doubt the sector had a great quarter this time, but there are always execution challenges and if you go back into history, there is a lot of lumpiness in their earnings which is not completely discounted in the valuation ratios. So, if you are invested in defence, I would say remain invested but from a fresh investment perspective to me, it is an avoid. Pick undervalued, high-quality stocks: Sonam Srivastava's 2025 playbook I am not sure about Railways. They are going up in sympathy with the defence hoping that government expenditure will pick up over there. We do not know that for sure because in the last three years, railway expenditure in the Budget has been pretty much stable at around Rs 2.5 lakh crore or so and over there also, despite a steep 30-50% correction in railway stocks, they are still quite expensive and some of the bigger ones like Titagarh Wagons came with a very disappointing set of numbers as well. I would avoid both sectors from a fresh investment perspective. But there is great long-term visibility and if you are an investor with a long-term view, you may remain invested. The big wave or the fad in the market right now is promoter exits and that too at steep discounts in some cases amid the rich valuations. There are many block deals on a daily basis and some even FII and DII driven. What is that smacking off and should one now warrant caution in the markets? Is it smacking of peak valuations by any chance? Dipan Mehta: We have seen this play out in the past also in the early half of 2024 right up to September 24 and we saw a correction after that. So, the minute the market starts to do well and valuations get steep, we are seeing promoter selling and we are seeing private equity selling and that all has been absorbed by retail investors either directly or through mutual funds. ADVERTISEMENT It has not reached the peaks which we saw in 2024, but certainly the trend is getting more and more accentuated. So, yes, it is a signal that markets are at the expensive zone and in my opinion, there are less uncertainties now than a few months ago with the exception of Trump and we do have a supportive Reserve Bank and a lot of favourable macro factors as well. In this earning season one thing is very clear that it has been very selective.I suspect the next few months will be very selective for the markets as well and wherever there are pockets of overvaluation, we will continue to see supply and this is going to be a very challenging time for the investors and not like what we saw last three-four years up to September '24 where entire market rallied. The entire trend is going to get very narrow and it is going to be a bit difficult to charter for the novice investors. ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
2 days ago
- Business
- Time of India
Stay put if you already have defence & railways stocks but avoid fresh investments: Dipan Mehta
Dipan Mehta , Director, Elixir Equities , says defence sector earnings have been strong, attracting investors and momentum trading, but valuations appear stretched with potential execution challenges. While railway stocks are rising in sympathy, government expenditure remains stable, and some companies have reported disappointing results. Existing investors may hold, but fresh investments in both sectors are not recommended due to valuation concerns . I want your view on the overall market yes, of course, but select packs in the market are once again gaining some steam like railways and defence. These are themes that had seen a runup, then cooled off for a bit and they have started spiking again today. Do you believe this is the beginning of another leg of spikes or do you believe it was just a one-off? Dipan Mehta: It is a continuation of the momentum which we have seen in these companies over the past few weeks or so. If you analyse the entire earning season, the best sector has been defence, not as much railways, but defence certainly has come out with flying colours and that is why investors are getting focused over there and a lot of momentum trading is also taking place over there and a lot of retail traders have entered these counters, Play Video Play Skip Backward Skip Forward Mute Current Time 0:00 / Duration 0:00 Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions and subtitles off , selected Audio Track Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. I think the valuations are a bit stretched at this point of time. No doubt the sector had a great quarter this time, but there are always execution challenges and if you go back into history, there is a lot of lumpiness in their earnings which is not completely discounted in the valuation ratios. So, if you are invested in defence, I would say remain invested but from a fresh investment perspective to me, it is an avoid. I am not sure about Railways. They are going up in sympathy with the defence hoping that government expenditure will pick up over there. We do not know that for sure because in the last three years, railway expenditure in the Budget has been pretty much stable at around Rs 2.5 lakh crore or so and over there also, despite a steep 30-50% correction in railway stocks, they are still quite expensive and some of the bigger ones like Titagarh Wagons came with a very disappointing set of numbers as well. I would avoid both sectors from a fresh investment perspective. But there is great long-term visibility and if you are an investor with a long-term view, you may remain invested. Live Events You Might Also Like: Pick undervalued, high-quality stocks: Sonam Srivastava's 2025 playbook The big wave or the fad in the market right now is promoter exits and that too at steep discounts in some cases amid the rich valuations. There are many block deals on a daily basis and some even FII and DII driven. What is that smacking off and should one now warrant caution in the markets? Is it smacking of peak valuations by any chance? Dipan Mehta: We have seen this play out in the past also in the early half of 2024 right up to September 24 and we saw a correction after that. So, the minute the market starts to do well and valuations get steep, we are seeing promoter selling and we are seeing private equity selling and that all has been absorbed by retail investors either directly or through mutual funds. It has not reached the peaks which we saw in 2024, but certainly the trend is getting more and more accentuated. So, yes, it is a signal that markets are at the expensive zone and in my opinion, there are less uncertainties now than a few months ago with the exception of Trump and we do have a supportive Reserve Bank and a lot of favourable macro factors as well. In this earning season one thing is very clear that it has been very selective. I suspect the next few months will be very selective for the markets as well and wherever there are pockets of overvaluation, we will continue to see supply and this is going to be a very challenging time for the investors and not like what we saw last three-four years up to September '24 where entire market rallied. The entire trend is going to get very narrow and it is going to be a bit difficult to charter for the novice investors.
Time of India
29-05-2025
- Business
- Time of India
Anand Tandon on how to play insurance and power generation themes now
Live Events You Might Also Like: Dipan Mehta flags valuation concerns amid IPO rush and promoter selling (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel , Independent Analyst, says insurance is a long-term business which continues to accumulate capital and therefore the ability to generate money out of it. Tandon considers it to be one of the core areas for growth and investments on a very long-term basis. Power generation companies with new facilities are poised for growth, unlike those with regulated tariffs like NTPC, whose value is tied to predictable cash flows from long-term PPAs. While transmission companies like Power Grid are expanding, their valuations may be overshooting their actual growth of all, this is a very large space and earlier we used to say that India is underinsured. If you look at the number of policies sold, it is not so much underinsured anymore, but in terms of the value of the policies, there is still a long way to go and more importantly people continue to confuse investments and a large amount of the sales of new policies that are happening, continue to be ULIP linked, which is not necessarily the best way to buy insurance. Insurance is a protection product. You should be buying protection. Investments are best done through other structures like mutual funds, etc. But be that as it may, it provides an opportunity for insurance companies to continue to penetrate the market and upscale the size of the policies as well as bring more complexity in terms of the coverage that they are that we are also looking at life insurance companies being allowed to enter into other areas, you will continue to get growth. The biggest of the lot, LIC, for example, is now getting more and more into non-participating policies and there is still some scope for them to increase the retention that they have from even the participating policies. So, overall, the earnings growth can be quite importantly, the company itself is valued almost at a discount to their portfolio. It is not particularly expensive, either. For the others, growth has not been as secular as one should have expected, and that is mostly because of the fact that we had some challenges suddenly when the regulator that kind of indicated that companies which are related to banks should not be selling their entire products through the banks and so on and the bank assurance business went into a bit of a flux. But that is now back and we should continue to see growth importantly, once you bring in a client, the client has to stay with you for years. It is a long-term business which continues to accumulate capital and therefore your ability to generate money out of it. To my mind, it remains one of the core areas for growth and investments on a very long-term basis in the you go back 10 years or 15 years, where you had a situation where everybody thought that it was the pot at the end of the rainbow and everyone set up fairly large capacities and mega plants were set up for power generation, much of which linked to international coal and that became a problem going forward. Then we had the reverse where the growth in the demand was fairly low and for the longest time – almost four or five years – we had a situation where merchant power was trading at below cost perhaps and that had become a companies were not willing to get into the distribution of utilities and were not willing to enter into long-term agreements. That too has turned and we now have a situation where you could have bought capacity at, let us say, two to three crores per megawatt which was costing almost a million dollars to set up and now you have got a situation where the market is trading these at multiples of the cost to set up. Both sides of the market tend to overdo whatever it is supposed the demand for power is quite good and therefore, not much capacity is being added. Things are much more aggressive in the renewable space which is causing problems for the transmission business because until we set up more batteries, transmission is going to be under stress because of the cyclical or because of the non-predictable nature of renewables. So, net-net we have a situation where the power generation companies are putting up new facilities and therefore are going to benefit from that but the ones that are going to get regulatory tariffs like the NTPCs of the world should not be trading as growth sectors because finally a certain amount of value can be attached to the NPV of their future cash flows and that is not going to change very muchThese are all PPAs which often last over a couple of decades at least, so the market is tending to treat them as growth stocks. If one has to look at growth, one of the areas that we continue to need more investment is actually transmission where again the likes of Power Grid, etc, have actually got regulated return on capital. There again, they are perhaps overshooting a bit in terms of the capacity they are putting up and the valuation that they are trading at. But overall, at least the numbers will come is no doubt that as they put up more transmission capacity, that will be fully utilised and therefore, they will get their regulatory return on capital. So, it is a steady business. It is a business which is highly predictable. It is in the growth phase, but the only question is you have to figure out when you are going to be buying them because they are not actually stocks which will show outsized growth beyond what the capacities are.
Economic Times
28-05-2025
- Business
- Economic Times
FII flows steady amid global volatility, but Trump tariff risk looms in July: Dipan Mehta
There is hardly any scope for innovation or one company doing exceptionally well over the other. So, from my point of view, I now want to get completely underweight or nil weight the insurance sector be it life insurance or general insurance. "It is a difficult sector, but a lot of companies did very well in speciality chemicals in this particular quarter. It is a cyclical business to some extent and I see an upcycle in the speciality chemicals business," says Dipan Mehta, Director, Elixir Equities. The setup I think depend one needs to be cognisant of the fact that even though the global yields have gone higher, US yields have gone higher, the dollar index is well under control, currency is well under control. So, can one say that as long as the dollar index remains weak and currency remains strong which is Indian currency, we should not worry about FII activity? Dipan Mehta: FII generally are realising the superior fundamentals of the Indian economy and they are seeing that in US the fundamentals and the corporate profitability are seem to be a bit challenged and there is just too much concentration in the Magnificent Seven. So, from that point of view, all emerging markets are doing well and India is getting benefits of that as well. So, I am not that much looking at the global factors at this point of time but really the real important event over here is what is going to happen in July when the 90-day period gets over and what is going to be the Trump tariffs that is the most important question and frankly, the real risk factor in this nascent uptick which we have seen in stock prices. But nonetheless, the long-term flows of the FII seem to certainly have improved. If you have to pick up spots based on earnings, where are you finding a sense that a 15-18% growth looks conceivable for next two-three quarters, where are you getting that confidence, in which name, in which sector, and which theme now? Dipan Mehta: It is a difficult sector, but a lot of companies did very well in speciality chemicals in this particular quarter. It is a cyclical business to some extent and I see an upcycle in the speciality chemicals business. These companies invested heavily just around 2020, around the covid times they came into the limelight because of China plus one strategy and generally cyclical up cycle and they were all expanded capacity significantly and expanded their footprint in the global market. A lot of them have got long-term supply contracts as well and now, since input prices have stabilised and even the final prices have improved a little bit, these companies are doing well on the volume front and the price front. So, within the entire space now we are looking at speciality chemicals very closely to see if there are any good winners over there. Right now, on optical basis these stocks look expensive because last few quarters the earnings have been a bit disappointing and they have been negative for many of the speciality chemical companies but these are great operating leverages and at some point of time the earnings can surprise us on the upside and from that point of view these stocks seem to be bit undervalued. But this is a very complex sector, difficult to understand, and there could be a great degree of diversity in the terms of the earnings which come through, so we need to be very careful which stocks we buy into. But if you ask me one sector which is looking promising after this earning season, I have to say it is speciality chemicals. Is it a contra call by any chance? Dipan Mehta: No, it has now gone off the radar completely and we have gone over this thing many times. The real reason here is that clearly, they have lost their moat. What is happening is with the kind of surge in GCCs, global capability centres, really the comparative edge of the IT software services companies has got eroded. Their clients themselves are going ahead and setting up captive software development centres themselves. So, what is really the value add of a software services company that is being questioned. Secondly, whatever happens, it is very clear that US economy is going to be stressed for the next few quarters. Recession, depression, crash, one does not know but definitely there is a great deal of uncertainty amongst US corporations. And in that kind of a scenario, they are not going to go ahead and increase their expenditure on software, so that is going to be a bit of a challenge for software service companies. And then there is this entire this AI thing. I thought this AI was going to be a great opportunity for Indian software service companies, but it does not seem to be so and a lot of those projects are very small and really it is not percolating down to the software services companies. So, for me, the entire sector is avoid except for two or three outliers you could say like a Persistent Systems which has an exceptionally well, maybe an Oracle which is more of a product company, Newgen but disappointed with Newgen is numbers which is kind of a platform company. So, there are just one or two picks here or there but by and large the traditional software services companies are a complete avoid. Help us with your take on Jio Financials because just yesterday, the stock was also up around 3%, but well, of course, it did had a news flow. But other than that what did well were some of the laggards within the banking space? Case in point being Bandhan Bank, RBL Bank, they did pretty well in trade just yesterday. At this point in time where in the banking space you are finding value? Dipan Mehta: See, I think that Bandhan, RBL came with decent set of numbers and maybe a lot of their issues are behind them. But one pocket within the bank space which did really well are the PSU banks. Across the board right from State Bank of India to Punjab & Sind Bank, the smaller bank, the larger banks, Canara Bank, Bank of India, Bank of Baroda. And if you look at their numbers, their NPAs, their credit growth, their CASA ratios, they are all matching up to what we are seeing in the private sector but valuations are still on the lower side. So, I see that the valuation gap, the performance gap between the PSU banks and the private sector banks is narrowing very fast. So, if you wanted to increase your exposure to the banks, the best way to play would be through the PSU banks. But if you still want to do, it is better to do it with the NBFCs. And in a situation like this where interest rates are lower and NBFCs per se have got lot more lending opportunities, they are far more flexible, and to an extent they manage the regulatory framework far better, so if I were to increase my exposure to the lenders, I would like to do it through the NBFCs and there are a lot of choices over there and our preference would be for companies which are offering multi-products like say a Bajaj Finance or L&T Finance or a Chola which is not just into gold financing not just into microfinance or vehicle finance, but across the board they offer all the lending products. I think those could give decent returns over the next few quarters or so. LIC is one of those non-starters. At 871 thereabouts, what is the call on the stock now? Dipan Mehta: See, I was very positive on LIC. As a measure of disclosure, we are invested in the IPO as well and are still holding that stock. But the entire insurance space now is not really inspiring or it is not really appealing to us. These insurance companies have been around for more than 10 years. LIC much less than that. But they have not really set the stock markets on fire. Their performance has been very volatile, it has been tepid. Their growth rates although optically they look good, but when you see the stock price appreciation over a 10-year period is nothing impressive. These are complex businesses to understand and to value. You cannot just take the price earning multiple and value them. There are many other nuances over there. But end of the day they have not really created a great amount of wealth for the minority shareholders and as a business it is heavily regulated. There is hardly any scope for innovation or one company doing exceptionally well over the other. So, from my point of view, I now want to get completely underweight or nil weight the insurance sector be it life insurance or general insurance. It is just that the track record for the past 5-10 years has not been that inspiring and from an investor's perspective you want that alpha, you want to beat the Sensex and Nifty get higher returns, I am not sure that insurance companies are your long-term bet.
Time of India
28-05-2025
- Business
- Time of India
FII flows steady amid global volatility, but Trump tariff risk looms in July: Dipan Mehta
"It is a difficult sector, but a lot of companies did very well in speciality chemicals in this particular quarter. It is a cyclical business to some extent and I see an upcycle in the speciality chemicals business," says Dipan Mehta , Director, Elixir Equities. The setup I think depend one needs to be cognisant of the fact that even though the global yields have gone higher, US yields have gone higher, the dollar index is well under control, currency is well under control. So, can one say that as long as the dollar index remains weak and currency remains strong which is Indian currency, we should not worry about FII activity? Dipan Mehta: FII generally are realising the superior fundamentals of the Indian economy and they are seeing that in US the fundamentals and the corporate profitability are seem to be a bit challenged and there is just too much concentration in the Magnificent Seven. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo So, from that point of view, all emerging markets are doing well and India is getting benefits of that as well. So, I am not that much looking at the global factors at this point of time but really the real important event over here is what is going to happen in July when the 90-day period gets over and what is going to be the Trump tariffs that is the most important question and frankly, the real risk factor in this nascent uptick which we have seen in stock prices. But nonetheless, the long-term flows of the FII seem to certainly have improved. If you have to pick up spots based on earnings, where are you finding a sense that a 15-18% growth looks conceivable for next two-three quarters, where are you getting that confidence, in which name, in which sector, and which theme now? Dipan Mehta: It is a difficult sector, but a lot of companies did very well in speciality chemicals in this particular quarter. It is a cyclical business to some extent and I see an upcycle in the speciality chemicals business. Live Events These companies invested heavily just around 2020, around the covid times they came into the limelight because of China plus one strategy and generally cyclical up cycle and they were all expanded capacity significantly and expanded their footprint in the global market. A lot of them have got long-term supply contracts as well and now, since input prices have stabilised and even the final prices have improved a little bit, these companies are doing well on the volume front and the price front. So, within the entire space now we are looking at speciality chemicals very closely to see if there are any good winners over there. Right now, on optical basis these stocks look expensive because last few quarters the earnings have been a bit disappointing and they have been negative for many of the speciality chemical companies but these are great operating leverages and at some point of time the earnings can surprise us on the upside and from that point of view these stocks seem to be bit undervalued. But this is a very complex sector, difficult to understand, and there could be a great degree of diversity in the terms of the earnings which come through, so we need to be very careful which stocks we buy into. But if you ask me one sector which is looking promising after this earning season, I have to say it is speciality chemicals. Is it a contra call by any chance? Dipan Mehta: No, it has now gone off the radar completely and we have gone over this thing many times. The real reason here is that clearly, they have lost their moat. What is happening is with the kind of surge in GCCs, global capability centres, really the comparative edge of the IT software services companies has got eroded. Their clients themselves are going ahead and setting up captive software development centres themselves. So, what is really the value add of a software services company that is being questioned. Secondly, whatever happens, it is very clear that US economy is going to be stressed for the next few quarters. Recession, depression, crash, one does not know but definitely there is a great deal of uncertainty amongst US corporations. And in that kind of a scenario, they are not going to go ahead and increase their expenditure on software, so that is going to be a bit of a challenge for software service companies. And then there is this entire this AI thing. I thought this AI was going to be a great opportunity for Indian software service companies, but it does not seem to be so and a lot of those projects are very small and really it is not percolating down to the software services companies. So, for me, the entire sector is avoid except for two or three outliers you could say like a Persistent Systems which has an exceptionally well, maybe an Oracle which is more of a product company, Newgen but disappointed with Newgen is numbers which is kind of a platform company. So, there are just one or two picks here or there but by and large the traditional software services companies are a complete avoid. Help us with your take on Jio Financials because just yesterday, the stock was also up around 3%, but well, of course, it did had a news flow. But other than that what did well were some of the laggards within the banking space? Case in point being Bandhan Bank, RBL Bank , they did pretty well in trade just yesterday. At this point in time where in the banking space you are finding value? Dipan Mehta: See, I think that Bandhan, RBL came with decent set of numbers and maybe a lot of their issues are behind them. But one pocket within the bank space which did really well are the PSU banks. Across the board right from State Bank of India to Punjab & Sind Bank, the smaller bank, the larger banks, Canara Bank, Bank of India, Bank of Baroda. And if you look at their numbers, their NPAs, their credit growth, their CASA ratios, they are all matching up to what we are seeing in the private sector but valuations are still on the lower side. So, I see that the valuation gap, the performance gap between the PSU banks and the private sector banks is narrowing very fast. So, if you wanted to increase your exposure to the banks, the best way to play would be through the PSU banks. But if you still want to do, it is better to do it with the NBFCs. And in a situation like this where interest rates are lower and NBFCs per se have got lot more lending opportunities, they are far more flexible, and to an extent they manage the regulatory framework far better, so if I were to increase my exposure to the lenders, I would like to do it through the NBFCs and there are a lot of choices over there and our preference would be for companies which are offering multi-products like say a Bajaj Finance or L&T Finance or a Chola which is not just into gold financing not just into microfinance or vehicle finance, but across the board they offer all the lending products. I think those could give decent returns over the next few quarters or so. LIC is one of those non-starters. At 871 thereabouts, what is the call on the stock now? Dipan Mehta: See, I was very positive on LIC. As a measure of disclosure, we are invested in the IPO as well and are still holding that stock. But the entire insurance space now is not really inspiring or it is not really appealing to us. These insurance companies have been around for more than 10 years. LIC much less than that. But they have not really set the stock markets on fire. Their performance has been very volatile, it has been tepid. Their growth rates although optically they look good, but when you see the stock price appreciation over a 10-year period is nothing impressive. These are complex businesses to understand and to value. You cannot just take the price earning multiple and value them. There are many other nuances over there. But end of the day they have not really created a great amount of wealth for the minority shareholders and as a business it is heavily regulated. There is hardly any scope for innovation or one company doing exceptionally well over the other. So, from my point of view, I now want to get completely underweight or nil weight the insurance sector be it life insurance or general insurance. It is just that the track record for the past 5-10 years has not been that inspiring and from an investor's perspective you want that alpha, you want to beat the Sensex and Nifty get higher returns, I am not sure that insurance companies are your long-term bet.
