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Economic Times
2 days ago
- Business
- Economic Times
Jyotivardhan Jaipuria on where to put money on the table and where to take it off
Other than banks and financials, Jyotivardhan Jaipuria, Founder & MD, Valentis Advisors, favours the Chemical sector which is gaining attention due to low dealer stocking levels. Cement sector is expected to benefit from consolidation and government demand. Pharma, especially CDMO, shows growth potential. US generics are attractive on corrections. Small and mid-caps offer stronger earnings growth, but valuation is key. Liquidity will drive earnings for small and mid-caps. The increase in the excise duty by the Maharashtra government has come as a bit of a shocker for the consumers and for alcobev companies as well. It is the highest ever hike that we have seen since 2011 on Indian made foreign liquor (IMFL), it is in the range of 50% to 60% which is likely to lead to an MRP hike of almost 30% to 50% for the brands. How do you see the alcobev pack playing out because analysts were getting incrementally bullish on the consumer discretionary, especially the alcobev part. How will this shape up now? Jyotivardhan Jaipuria: We do not own these stocks and that has been one of our concerns that all of these are very dependent on government policies and it is dependent on each state and very often the states keep changing duties and so that is what starts affecting the demand. If I look at a very macro picture what we have to remember is lot of states are struggling for revenue and when they are struggling for revenue because of the subsidies they have given or the election promises they have given, stuff like alcohol becomes one very easy target from where they can raise avenues because it is treated as this is for the rich people, it is not for the poor people and that has been our concern really that it is very difficult to keep forecasting what each state does over here. We generally stayed away from this pack. This is going to be negative for demand for the sector. Before we discuss more of your sectoral bets, I want to get your broader view on the market. We are at an 8-month high when it comes to the Nifty. The last time we saw this level was in October. What are your expectations going forward in the next 6 to 12 months? What are the key factors we should be watching out for especially in terms of global cues? Jyotivardhan Jaipuria: Yes, you are right, what we are seeing is like the market has recovered from its lows. The one good thing for us has been India's macros are looking very good. If you think of the twin deficit, that is looking great; inflation is coming down, especially held by oil prices going down; RBI has been very proactive on the monetary policy front. We have a very easy liquidity. Already they have probably pumped in Rs 6-7 lakh crores of liquidity. The macro is looking very good and that is helping us. The valuations are not cheap. Earnings hopefully will recover. We saw some recovery in the March quarter, but still it was like we are still running at less than single digit returns. So, hopefully, this year we will have the forecast of 10% to 11% growth which helps us drive returns. Overall, the concern is global. Basically the deadline of 90 days for the Trump tariffs gets over on the 9th of July and so far, not many deals have got signed. Even India's deal is still a work in process. We do not know whether he puts the reciprocal tariffs back again or if he will go back and say that he will give another 90 days or 60 days for negotiation to happen and so that is one thing which weighs on the market. One positive for the market to the later part of this year and for the Indian market is that MSCI does this review and Korea is up for review again, and whether they will move to a developed status. If that happens, it will be very positive for all the other countries in the emerging market space. India's weightage will probably go up roughly 2% because of that and that will help get flows to the Indian market, so that is a positive from the global which we have to keep an eye on by the end of this month. Let us talk about the sectors then. While there is a common consensus on the banking pack, the NBFCs and the financials, even the valuations look very reasonable. But what are the other sectors that you would be bullish on and what are the bets where you would be taking money off the table? What are the risks that you see in the coming future? Jyotivardhan Jaipuria: Yes, you are right, we also are positive on banks and financials. More or less everybody has turned positive on it. Apart from that, one other sector we are bullish on. Just remember we generally do not go by what is current momentum but what is out of favour, so we have a whole 3 U philosophy which looks at sectors which are under-owned and under-performing. One sector which we have been playing now has been the chemical sector, and that has been out of favour for quite some time. The stocks have not done well for the last two years and there are some interesting ideas which are coming up there, especially because globally, a lot of dealers have destocked chemicals. The stocking level at the dealer-end is close to a two-year low and that is where we see some upside coming through in demand. Here we have to be careful because stocks are still not cheap. So, look for stocks where there is a substantial earnings growth upside over the next two years. But in general, chemicals is one sector we like. The other sector which we like is the cement sector. Cement has not done much in terms of earnings growth, and has been flattish for the last 12-18 months. There has been a lot of consolidation in the sector which probably helps over the next couple of years because it becomes easier to hike prices. Second, government demand should pick up and so for us, there are a lot of interesting ideas to find there. We are getting into the monsoon season which is typically like a lean season for cement. Over the next few weeks, pick up cement stocks on dips. So, those would be two sectors we like. We also like pharmaceuticals, but there we have to be a little careful with Trump's tariffs because there has been a lot of contradictory talk from him. So, be a little careful there. These are very secular growth stories, especially the CDMO pack in the pharma space. Within the pharma space, are there any particular pockets where you find more value than the others? Jyotivardhan Jaipuria: Yes, one of them is the CDMO space where value is not there in the sense these stocks are not cheap and are rather expensive. But for us, over the next three-five years there is lot of visible growth there and so just the sheer growth which we have most companies there could have a growth compounded for the next maybe three-five years or in the range of 25% plus, so that is what is really probably going to drive earnings in the space. None of these stocks are very cheap, so when we look at it, we always think that the valuations have a lot of margin of safety probably, but we are quite confident that the earnings will play out and so that is what we are playing. Now, there are obviously two other spaces in the pharma space, one is domestic pharma and the other is the US generics or in general the global generics. So, we have actually been more positive on the US generic side than on the domestic pharma side because US generics had done quite poorly for four-five years and for us, we were sensing a turnaround. We have been playing US generics for the past 18 months, and that is where there could be a lot of wobble if Trump changes some duties there. But for us, the duties will create temporary dislocation. But Indian generics are really cheap. There would not be a longer-term impact. At some point, the consumer prices in the US will probably go up to reflect the duty changes. So, we would be bullish on US generics on any correction and we like the CDMO space. After the correction that we have seen in the SMIDs, are you comfortable with the valuations? As far as the smallcaps are concerned, there could be an improvement in the earnings growth going ahead. Do you see comfort in buying into smallcaps or would you still be wary of the broader market? Jyotivardhan Jaipuria: When we started the calendar year, it was a very easy call that the largecaps will do better than the smallcaps because that time the valuation disparity was huge. After the correction that we saw in January-February, we became more neutralish. In fact, the tilt became slightly more towards the small and midcaps because like you said the earnings are much stronger for the small and midcaps. Even in the last quarter, the earnings growth for the midcaps was close to 17-18%, the earnings growth for the smallcaps was just about double digit and the earnings growth for the largecaps was more like 5-6%. So, the earnings growth will be sharp and with liquidity coming into the system, earnings growth this year will surprise on the upside for the small and midcap which will drive earnings. At the same time, one should be careful of being a very blanket call because there are a lot of pockets in the small and midcap which are not very cheap. You have to look at valuations a little more closely because this is not like a runaway which we saw post Covid where every smallcap was flying. I would be a little more positive on the smallcaps but be careful of the valuations and look for stocks with earnings visibility. I want to get your overall view on SMIDs. Last time we spoke, you said the next leg of growth is going to be driven by earnings and just before you were mentioning all the sectors that you prefer, they have an earnings upside. Last time you said that 12% recovery in FY26 is what you expect in terms of earnings. Do you still retain that view or has it changed and what is the outlook there? Which are the sectors that are going to drive this growth? Jyotivardhan Jaipuria: We still retain that view that we will get double-digit earnings growth for FY26. As you know, FY25 was a very weak year for earnings, so one is probably the base impact helps and what you will see over the next six months is like a very poor base of government and corporate capex. It will be easier to show growth for a lot of these companies which are dependent on government capex. The other thing that will help is liquidity in the system. Rates are coming down, and that will be very positive for earnings to come through. In terms of, what will help, basically, we will see some of the engineering names and the capital good names continue to do well. Some of the consumer discretionary names will also show strong earnings growth. We will probably see a rebound in some of these commodities, like cement which will play an important role in terms of driving the earnings growth for next year, plus stuff like telecom.
Time of India
2 days ago
- Business
- Time of India
Jyotivardhan Jaipuria on where to put money on the table and where to take it off
Other than banks and financials, Jyotivardhan Jaipuria , Founder & MD, V alentis Advisors, favours the Chemical sector which is gaining attention due to low dealer stocking levels. Cement sector is expected to benefit from consolidation and government demand. Pharma, especially CDMO, shows growth potential. US generics are attractive on corrections. Small and mid-caps offer stronger earnings growth, but valuation is key. Liquidity will drive earnings for small and mid-caps. The increase in the excise duty by the Maharashtra government has come as a bit of a shocker for the consumers and for alcobev companies as well. It is the highest ever hike that we have seen since 2011 on Indian made foreign liquor (IMFL), it is in the range of 50% to 60% which is likely to lead to an MRP hike of almost 30% to 50% for the brands. How do you see the alcobev pack playing out because analysts were getting incrementally bullish on the consumer discretionary, especially the alcobev part. How will this shape up now? Jyotivardhan Jaipuria: We do not own these stocks and that has been one of our concerns that all of these are very dependent on government policies and it is dependent on each state and very often the states keep changing duties and so that is what starts affecting the demand. If I look at a very macro picture what we have to remember is lot of states are struggling for revenue and when they are struggling for revenue because of the subsidies they have given or the election promises they have given, stuff like alcohol becomes one very easy target from where they can raise avenues because it is treated as this is for the rich people, it is not for the poor people and that has been our concern really that it is very difficult to keep forecasting what each state does over here. We generally stayed away from this pack. This is going to be negative for demand for the sector. Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Swing Trading: Elite Trader Mr. Hemant Shares His Winning Strategy for Free! TradeWise Learn More Undo Before we discuss more of your sectoral bets , I want to get your broader view on the market. We are at an 8-month high when it comes to the Nifty . The last time we saw this level was in October. What are your expectations going forward in the next 6 to 12 months? What are the key factors we should be watching out for especially in terms of global cues? Jyotivardhan Jaipuria: Yes, you are right, what we are seeing is like the market has recovered from its lows. The one good thing for us has been India's macros are looking very good. If you think of the twin deficit, that is looking great; inflation is coming down, especially held by oil prices going down; RBI has been very proactive on the monetary policy front. We have a very easy liquidity. Already they have probably pumped in Rs 6-7 lakh crores of liquidity. The macro is looking very good and that is helping us. The valuations are not cheap. Earnings hopefully will recover. We saw some recovery in the March quarter, but still it was like we are still running at less than single digit returns. So, hopefully, this year we will have the forecast of 10% to 11% growth which helps us drive returns. Overall, the concern is global. Basically the deadline of 90 days for the Trump tariffs gets over on the 9th of July and so far, not many deals have got signed. Even India's deal is still a work in process. We do not know whether he puts the reciprocal tariffs back again or if he will go back and say that he will give another 90 days or 60 days for negotiation to happen and so that is one thing which weighs on the market. One positive for the market to the later part of this year and for the Indian market is that MSCI does this review and Korea is up for review again, and whether they will move to a developed status. Live Events You Might Also Like: Earnings outlook to get better in 4-6 months stage set for better DII & FII flows: Karthik Kumar If that happens, it will be very positive for all the other countries in the emerging market space. India's weightage will probably go up roughly 2% because of that and that will help get flows to the Indian market, so that is a positive from the global which we have to keep an eye on by the end of this month. Let us talk about the sectors then. While there is a common consensus on the banking pack, the NBFCs and the financials, even the valuations look very reasonable. But what are the other sectors that you would be bullish on and what are the bets where you would be taking money off the table? What are the risks that you see in the coming future? Jyotivardhan Jaipuria: Yes, you are right, we also are positive on banks and financials. More or less everybody has turned positive on it. Apart from that, one other sector we are bullish on. Just remember we generally do not go by what is current momentum but what is out of favour, so we have a whole 3 U philosophy which looks at sectors which are under-owned and under-performing. One sector which we have been playing now has been the chemical sector, and that has been out of favour for quite some time. The stocks have not done well for the last two years and there are some interesting ideas which are coming up there, especially because globally, a lot of dealers have destocked chemicals. The stocking level at the dealer-end is close to a two-year low and that is where we see some upside coming through in demand. Here we have to be careful because stocks are still not cheap. So, look for stocks where there is a substantial earnings growth upside over the next two years. But in general, chemicals is one sector we like. You Might Also Like: Selectivity is key as markets enter narrow, range-bound phase: Dipan Mehta The other sector which we like is the cement sector. Cement has not done much in terms of earnings growth, and has been flattish for the last 12-18 months. There has been a lot of consolidation in the sector which probably helps over the next couple of years because it becomes easier to hike prices. Second, government demand should pick up and so for us, there are a lot of interesting ideas to find there. We are getting into the monsoon season which is typically like a lean season for cement. Over the next few weeks, pick up cement stocks on dips. So, those would be two sectors we like. We also like pharmaceuticals, but there we have to be a little careful with Trump's tariffs because there has been a lot of contradictory talk from him. So, be a little careful there. These are very secular growth stories, especially the CDMO pack in the pharma space. Within the pharma space, are there any particular pockets where you find more value than the others? Jyotivardhan Jaipuria: Yes, one of them is the CDMO space where value is not there in the sense these stocks are not cheap and are rather expensive. But for us, over the next three-five years there is lot of visible growth there and so just the sheer growth which we have most companies there could have a growth compounded for the next maybe three-five years or in the range of 25% plus, so that is what is really probably going to drive earnings in the space. None of these stocks are very cheap, so when we look at it, we always think that the valuations have a lot of margin of safety probably, but we are quite confident that the earnings will play out and so that is what we are playing. Now, there are obviously two other spaces in the pharma space, one is domestic pharma and the other is the US generics or in general the global generics. So, we have actually been more positive on the US generic side than on the domestic pharma side because US generics had done quite poorly for four-five years and for us, we were sensing a turnaround. You Might Also Like: Exclusive | Raamdeo Agrawal reveals his simple 2-step formula for finding multibagger stocks We have been playing US generics for the past 18 months, and that is where there could be a lot of wobble if Trump changes some duties there. But for us, the duties will create temporary dislocation. But Indian generics are really cheap. There would not be a longer-term impact. At some point, the consumer prices in the US will probably go up to reflect the duty changes. So, we would be bullish on US generics on any correction and we like the CDMO space. After the correction that we have seen in the SMIDs, are you comfortable with the valuations? As far as the smallcaps are concerned, there could be an improvement in the earnings growth going ahead. Do you see comfort in buying into smallcaps or would you still be wary of the broader market? Jyotivardhan Jaipuria: When we started the calendar year, it was a very easy call that the largecaps will do better than the smallcaps because that time the valuation disparity was huge. After the correction that we saw in January-February, we became more neutralish. In fact, the tilt became slightly more towards the small and midcaps because like you said the earnings are much stronger for the small and midcaps. Even in the last quarter, the earnings growth for the midcaps was close to 17-18%, the earnings growth for the smallcaps was just about double digit and the earnings growth for the largecaps was more like 5-6%. So, the earnings growth will be sharp and with liquidity coming into the system, earnings growth this year will surprise on the upside for the small and midcap which will drive earnings. At the same time, one should be careful of being a very blanket call because there are a lot of pockets in the small and midcap which are not very cheap. You have to look at valuations a little more closely because this is not like a runaway which we saw post Covid where every smallcap was flying. I would be a little more positive on the smallcaps but be careful of the valuations and look for stocks with earnings visibility. I want to get your overall view on SMIDs. Last time we spoke, you said the next leg of growth is going to be driven by earnings and just before you were mentioning all the sectors that you prefer, they have an earnings upside. Last time you said that 12% recovery in FY26 is what you expect in terms of earnings. Do you still retain that view or has it changed and what is the outlook there? Which are the sectors that are going to drive this growth? Jyotivardhan Jaipuria : We still retain that view that we will get double-digit earnings growth for FY26. As you know, FY25 was a very weak year for earnings, so one is probably the base impact helps and what you will see over the next six months is like a very poor base of government and corporate capex. It will be easier to show growth for a lot of these companies which are dependent on government capex. The other thing that will help is liquidity in the system. Rates are coming down, and that will be very positive for earnings to come through. In terms of, what will help, basically, we will see some of the engineering names and the capital good names continue to do well. Some of the consumer discretionary names will also show strong earnings growth. We will probably see a rebound in some of these commodities, like cement which will play an important role in terms of driving the earnings growth for next year, plus stuff like telecom.
Time of India
09-05-2025
- Business
- Time of India
India's macro tailwinds offer relative strength amid global uncertainties: Jyotivardhan Jaipuria
"India is one of the few countries where we are getting that sort of liquidity coming which is helping us a lot. But there are some global factors which are not in our control, like the tariffs which are going on with the US," says Jyotivardhan Jaipuria , Founder & MD, Valentis Advisors. Tell us what are we looking at as far as the near-term is concerned because if you look at the entire year, we were working with rather lukewarm expectations or expectations of a lower return. But if we look at the macros now and how macro is shaping up, it augurs very well for India whether it is the dollar cooling off or whether it is the oil prices coming off or the FII buying that is coming back to India. But there is a looming threat of the tariffs, there is an uncertainty as far as the US economy is concerned, and of course the Indo-Park tension that is ongoing. How should one really look at these markets and how should one be placing their bets? Jyotivardhan Jaipuria: Yes, like you said it is a year where it is going to be a year of low returns in the sense that if you see the last four-five years post covid, return have been extraordinarily high. We had a sharp re-rating of the market as well as good earnings growth which came both from topline increase as well as from margin increase. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Bangka: Beautiful New Senior Apartments with Two Bedrooms Senior Apartments | Search Ads Search Now Undo Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 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 settings , opens captions settings dialog captions off , selected Audio Track default , selected 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. So, to that extent markets need to consolidate and we probably are going to see that consolidation phase in calendar year 25. Now, obviously like you said the macro is turning very positive for India and at least on a relative basis India is looking very good because one is, oil prices have come down which is giving room for RBI to cut rates and plus they are increasing liquidity in a big way. So, we have seen very easy monetary conditions. Over the last four months, they put in six lakh crores of liquidity in the system. So, India is one of the few countries where we are getting that sort of liquidity coming which is helping us a lot. But there are some global factors which are not in our control, like the tariffs which are going on with the US. Live Events Our view is that probably the worst of the tariffs we saw on April 2nd and from here tariffs are going to get a little more sane. We will see a lot of deals happening and so maybe four months later we will find that the tariff is not as bothersome, but in spite of that probably you are seeing a global economy which is going to slow down. The US will slow down. A lot of other parts of the world will slow down. So, India will have to fight that headwind which they will see. Of course, the India-Pakistan situation is tense, though my view is that we probably are not going to see that flare up in any meaningful way, so it is something which will pass. If we go back into history of markets also, you tend to see that every time there is a conflict, market get nervous at the time of the conflict, but soon markets get over with the conflict and markets start to resume their normal space. Yes, a lot many moving parts right there and for the past couple of days we are seeing that the markets are just holding that nervousness around, not doing much. But give us some sense, what strategy should investors adopt. Is it time to protect the capital or maybe it is a time given the correction that one can still start buying and if yes, then which are the pockets that are looking attractive? Jyotivardhan Jaipuria: So, people have to buy today thinking of the next three years, do not buy thinking of the next one-two months. It is a time, like I said, to build your capital and think of this now more like a test match not like a T20 where we are going to build our portfolio for this year and then we get the returns over the next few years and keep your return expectation tempered, like what we got in the last three years may not repeat in the next three years. The other suggestion I would have is probably try and stagger your investment over the next few months rather than put it in one shot now because there are a lot of uncertain events. So, a staggering approach would work well. If some of these things do not go well, at least you have money to buy more at that stage. Some of the stuff which we like, for us we typically tend to focus on valuations. We are very valuation conscious. We like to buy sectors which are beaten down and which are not in favour. We generally do not buy momentum stocks. We buy probably, I would say, anti-momentum companies. So, we like the banks still and we were very early to call the banks. We think that still continues to be a pocket where valuations are looking cheap. And if you look at and I have said this on some shows earlier also of yours, but if you look at valuation in banks today versus what a 10-year average is, banks is probably the only sector where valuations are cheaper today than a 10-year average. So, the banks still look attractive to us. The other segment which we continue to like is the pharmaceutical. But obviously there is some threat that if Trump goes ahead with this tariffs on pharmaceutical, then there could be some short-term correction in this whole sector, but otherwise it is something which is looking very good on a secular basis, on a three-year, five-year basis, pharma is something which is going to do well. Another sector which in India looks good is the cement sector. So, we have seen cement prices start to move up finally after a long time. It is a sector which has got consolidated a lot relative to what was in the past and the top two and the top five players account for the large part of the shares. So, it is a sector again which over the next two years could be a great way to play. So, there are pockets, focus on valuations and focus on where visible earnings growth are and you will find some sectors where you make good money in the long term. So, as you rightly pointed out banks is a pocket where you see valuation comfort. You also pointed out that pharma is where you see growth is coming in. But besides that, let us talk about the broader market then, despite the correction the smids are still expensive, especially the smallcaps are still expensive and usually one would like to invest in small and midcaps for value generation, for value creation. How would you place your bets in those pockets, is it going to be a buy on dips, is there a valuation comfort in the sense that on every dip now can you stagger your investment as far as the smids are concerned and within that, what are the pockets of value because there are certain pockets that are still expensive right now? Jyotivardhan Jaipuria: So, when you look at the small and the midcap, actually it is the midcap which is more expensive than the smallcap. The smallcap is still little better placed relative to the midcap. But very often when we look at the aggregates, when we compare smallcap probably with the largecap or with history, then it is looking expensive. But what goes for the smallcap is the growth. So, the last one-year earnings growth was weak in the largecap as well as the smallcap or the midcap. In general, earnings growth has been weak. We think that the earnings can recover. So, if we can get that sort of recovery coming in, earnings growth which analysts are forecasting today and if you take like a consensus analyst forecast, for the largecap the earnings growth forecast for the next couple of years is 12% and for the smallcap the earnings growth forecast is 22%. So, if these earnings hold and the earnings actually come in line with the analyst forecast, then you will find that the smallcaps have done decently well relative to what we are thinking of today. The other is like when you look at sector by sector, there are a lot of small companies which do not look as expensive the largecap, though the aggregate everything looks more expensive because obviously in the largecap you have a lot of public sector companies and all which are not represented in the smallcap index. So, on an overall basis, the largecap is looking cheaper. But when we go sector by sector, we find a lot of small companies which probably can grow faster than the largecap and which do trade at reasonable valuation. The third thing is, of course, we have seen a steep correction in the smallcap. So, if you see since the beginning of this calendar year, smallcaps are down and they were down like 20 plus percent at some point, they have recovered a bit of it, still down like 15% since the beginning of the year. So, you have seen a correction, probably a year later we will think of this correction as a buying opportunity, means we have done some analysis and typically the highs of the smallcap tend to come in the next 12-18 months unless we have some Lehman sort of event. So, in some sense you can expect the highs to come back over the next 12-18 months and that will make you reasonable money. Valuations are not cheap still like you rightly said. So, I would say stagger your investments in smallcap, do not put everything in one shot. Be ready for some drawdowns and do not panic at that time, but use the rest of the money you have to buy more at that time. But over the next two years if growth in India holds up, then smallcap will give you good returns. Given the fact that now in US, the market is really open to make trade deals happen and well, of course, we will be watching out for the final trade deals as the Donald Trump has already indicated for one, but give us some sense that if major nations go through this trade deal sort of a thing with the United States, do you believe maybe it could be a time to once again look out for some beaten down commodities, beaten down export-oriented names? Jyotivardhan Jaipuria: So, one segment which we have been nibbling into has been the chemical sector. So, if we just step back and think chemical sector done very badly over the last two years and the positive for us is that there was a lot of excess stock lying at the dealer level in the chemical sector, that stock has gone down. So, now the situation is much better. Demand is picking up a bit and at some point if demand picks up, then the dealers will start to restock rather than destock which they have done so far. So, second is the valuations have become much cheaper because these sectors have underperformed quite a bit. So, it is a sector we are nibbling into. Now, US tariffs do make a difference to this sector because if US tariffs are very high, then probably the US market get blocked off. So, if we can get a trade deal done there, then chemical is one sector which one should focus on and there are valuations which are now starting to get attractive. Not all of them are very cheap, but at least they are starting to get attractive and growth will come back in this sector.
