Market Watch: Jigar Mistry, Co-Founder, Buoyant Capital
Upmove in PSUs and is there merit in buying them?
Of course, there is a lot of merit in buying some of those names. If you look at the energy security and raw material security for a lot of Indian companies, it simply isn’t there, we are importing close 280 million tonnes of thermal coal, 50 million tonnes of coking coal and therefore, if there is a global disruption then Coal India can only supply so much in the e-auction market, so I would assume that almost 70 percent of the profitability is coming from the e-auction market for Coal India, which used to be only 15 percent of the volumes a few years back. So, in that scenario, if the e-auction prices are going to go up then Coal India definitely sounds like a legitimate beneficiary of this.
At the same time, you know, a lot of this coal could potentially be diverted to power utilities and therefore the end-users in other segments like cement or secondary steel could see some amount of cost pressures. So that is certainly a case there.
With regards to NTPC, etc., there has always been a case of those being value purchases and per se, a regulated utility doesn’t make that much money when if power prices globally or in India are up, but you need reasons to buy something that is very inexpensive, and this could be one of those.
In terms of the petrochem cycle and the refining margins, the team is reasonably bullish on both of those and so HPCL, BPCL names do sound interesting. We have owned BPCL for a very long period of time and continue to own that even now.
My sense is that banking sector post the Q2 and run up to Q2 could be very good. ICICI Bank, SBI, Federal Bank, Kotak Mahindra Bank, HDFC Bank are the ones that we own. Other than that, there is Flourochem is one name that is very interesting to us. In the reopening side, we like IRCTC, Pokarna and United Spirits, ABFRL as well. And lastly, in the aluminium space, we like Vedanta. So those are the few names that we currently have in the fund.