Latest news with #ElixirEquities
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.
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.
Time of India
22-05-2025
- Business
- Time of India
markets: Market to turn highly selective after mixed earnings season: Dipan Mehta
ADVERTISEMENT ADVERTISEMENT "Coming specific to your question as to which are the sectors where numbers were good, I thought we had the first good signs of pick up in consumption, especially urban consumption , so be it QSR or be it retail, be it hospitality, or even healthcare, all of those sectors, travel and tourism, aviation, all of those did well, so that is one clear conclusion from this sector that consumption stock started to do much better," says Dipan Mehta , Director, Elixir Equities Dipan Mehta: I think that broadly this earning season has been a bit of a disappointment and across the board large sectors like banks, NBFCs, software, they have disappointed and also across the board it seems that there are a lot of issues in terms of earnings growth which, of course, may get resolved going forward with better monsoons, lower interest rates, and tax this earning season has been a mixed bag and what this earning season also is telling us is that the market is going to get extremely selective and the broad-based rally which we saw for the last three-four years that may not continue into the specific to your question as to which are the sectors where numbers were good, I thought we had the first good signs of pick up in consumption, especially urban consumption, so be it QSR or be it retail, be it hospitality, or even healthcare, all of those sectors, travel and tourism, aviation, all of those did well, so that is one clear conclusion from this sector that consumption stock started to do much than that broadly it has been a bit of a mixed bag, but within sectors also which have disappointed, there could be a few winners like in cement I thought ACC, Ambuja, Birla Corp, came in with good set of like that, if you go sector by sector, there are some winners but by and large we come out of this earning season with lower ideas or lesser ideas than when we enter pharma is a classic example of what I said that one needs to be very selective in the market and within the pharma also companies which have a slightly differentiated business model, they may emerge to be the pharma space, we like the CDMO companies where we think there are good growth prospects and overall, I think because of China plus one they will benefit significantly, but there is still a lot of uncertainty around Trump tariffs for pharma companies so that also needs to be kept in I would say it is important to be a bit selective and focus on companies which have a different business model and on the whole investors should be equal to slightly underweight pharma as well. Last few quarters have been exceptionally good, so base effect will also come into play from next quarter onwards, so you could see slowdown in earnings on that count as well.
