Nischal Maheshwari's Take On Private Vs PSU Banks, Cement Sector Trends & Telecom Tariff Hikes

I'm Nisha. Let's get in your take as to where you stand when it comes to banks. Are you sort of very clear cut when it comes to private versus PSU or would you club them among the same lot? And what is it that you're expecting, for instance, when it comes to earnings and in terms of, you know, entering this space right now? So if I look at the banking as a sector, then I think private as well as PSUI think there is no difference there. They are in a Goldilocks kind of scenario for the last two years. And as yet we have not seen the credit cost going up for any of them, though we are now seeing some things in the armor, especially with G1 came I think a week back and they said that on the MFI space, they are seeing some credit costs going up. So I think we are seeing first signs of some amount of stress in the old banking space. So as a banking as a space, don't see much stress. But obviously historically we have seen there is a difference between the PSU and the private sector banks and whether in terms of management track record and other things. So our preference has always been on the private sector bank. We continue to like them and I think they have underperformed for the last one 1 1/2 year. So the recent rally, what we see here is a catch up. So but there is more, more space for the private sector bank has yet to go up. So we continue to like them and recommend PS US. We think, I think they have more or less reached the top of their journey. So I think taking away some profits from the PS US is not uncalled for. OK, so that's the view on financials. Let's just hold that thought. But meantime, initial let's get in your take on the cement space. You know the kind of consolidation that we've been witnessing, the fact that a lot of brokerages are talking about the impact of the elections as well as the heat wave. What is it that you've made of the trends within cement? So I think last two quarters has been a bit slow which was expected because the because of the election and obviously some want to slow down was expected. But I think going ahead we are quite positive. On the cement side, the government is back. They are very, very strong. Historically, we have seen big on the infrastructure spending. Government is the biggest spender across India basically as far as infra is concerned. So I don't see any reason to be worried about it. The other thing is on the consolidation, we have seen in the last two years several companies being bought out and Adani Group is the new entrant there basically and they are consolidating the space, which is good for the industry per SE. So I think valuations wherever we see lower than norm, basically, I think those stocks should be looked at. Look at some of these cement stocks. Consolidation is good for the entire industry. We're talking about industry and the kind of moves we have seen there. What's the view? Initial on telecom sector clearly didn't see much interest yesterday, but the stocks were firing away and pinning in hopes on a tariff hike. What's your own assumption on tariff hikes? Is it likely to happen soon and is it in the price now? So yeah, it seems to be in the price. I think all of all these stocks have runaway, basically expecting a price hike to happen. But I think as, as all of us has enumerated several times, basically on various equations, tariffs in India are the lowest town across the world. So I think there is a huge space to go ahead. Basically, I think tariffs should be closer to like ₹300 ARPU. So I think these guys can make a decent ROV. So that is what my take there. But I think now tariff hike is almost imminent. I think most of the management's have guided it. People were waiting for the elections to go through. I think that has happened. So, but I think it's already discounted in the market. So I think one should wait and see what happens basically, especially on the Vodafone Idea side as far as this option was there because I think it's been a tepid one. But that was expected because I think more all the three companies have enough bandwidth. So they are really only looking for spaces where there were gaps. And that's why I think most of them have looked at a 4G or A5G in the circles where there are gaps basically. And we do not see the same kind of auctions we've seen in the earlier years, A1 lakh crore and all. But those were when 4G and 5G were about to get rolled out. So as expected, nothing, nothing out of the ordinary are from cement as well as telecom. You have seen quite a bit of you know move coming in in the power sector as well. So whether it was a CSC, whether it is the latest news coming in on JSW energy for PPA being signed and that entire news around you know positive financing norms for the likes of Pfc, REC, iterator in the sense of 54 EC, etc. Now given all of this context in on one hand and the other context that these stocks have run up, what do you do with the power stocks right now? So in case of power, I think you have to be now very stock specific. There is done. I think the undervaluation in the sector has gone away basically in the last one year. The stocks have done really well. I think there has been over exuberance as far as the power is concerned and whether it is the equipment, whether it is the supplying company, whether it is the generation guys. I think all of them basically have done really well in the last one year. So I would, I would actually recommended a portion on the whole sector per SE, be very stock specific. Look at wherever you're seeing growth. If there is a strong growth chance, basically we justify the multiples. That's the only way you should be looking into acquiring these stocks. But otherwise, I think it's a good time to just take away profits. The table initials specifically wanted your view about Tata Motors and we'll play that sound bite also shortly when we talk to the management. What's your view on a couple of these names, the likes of Eminem, Tata Motors, because they've run up quite a bit. The commentary that the management's have been given have been fairly, you know, clear in terms of what they are looking at. They've managed to deliver as well. Is there anymore price discovery which is there in terms of Eminem and Tata Motors? So Tata Motors definitely, I think one has to wait and see after the split happens. I'm very positive, especially on the PV side of the Tata Motors because they have already taken almost around 7080% of the EV market at the moment and they have products they are scaling, scaling up their production. So I think Tata Motors should definitely be looked out upon basically once the split happens as far as M&M is concerned, I think their major season is starting now because I think there has been a good monsoon Tractor is one of the major products basically. So let's see if that works up. So definitely, I think if you are having M&M in your portfolio, hold on, there is no hurry to buy the, no hurry to take away profits from there. But Tata Motors should definitely be looked at, OK. And given the fact that we're constantly seeing the US dollar as well gaining traction. Initial, just wanted to get in your sense as to how one can really look to play the theme of the weakening rupee or what you're expecting as well when it comes to the dollar gaining traction? So I think dollar is gaining traction for some time now for almost I've seen whatever six months, 5-6 months against all emerging market currencies and I think so it is happening against India. So nothing much worrying about that. Historically, we have seen in time in, in these times basically that the Dfis pull away money and they have been pulling away. So and there are two reasons for that basically. Obviously one is they are finding more better opportunities abroad, other countries and obviously the dollar rupee weakening also is not helping that. But domestic flows have been so strong basically that that is being able to counter it pretty well and we are seeing new highs. So on the equity market doesn't seem to be much impact at the moment. Let's see how it plays out. Point taken. But just quickly before I let you go, I'm just looking at the pre open rates. Nishal and Whirlpool is showing quite a bit of fraction right now. That entire buzz of perhaps the global parent Bosch looking at making a stake for global Whirlpool is having the street excited. And we did hear Eureka Forbes management yesterday. We did talk about, OK, I think there's a breaking news right now wherein Ultratech has invested in India's cement. So that's something that we'll have to address right now because India Cement was up almost 15% yesterday. There was a lot of chatter around, you know, whether this is going to happen. India Cement has been a candidate for takeover for the longest time and the street was wondering whether it's going to be Ambuja cement that takes over, whether it is Ultratech. But now we understand from agencies that it's Ultratech Cement that has bought stake in India Cement. Care to comment, Nishal? I know we've been put in a spot with the breaking news right now, but anything that you would want to comment with respect to this news coming in? And this has happened at 267 per share, apparently. So I'm saying basically, this is going to be a long drawn out battle. It's not going to be easy. And Ultratech is pretty strong in the South. So they have to even worry about the CCI whether they will approve it or not. So that is, that is what one has to see. But I'm, as I said earlier, basically consolidation is good for the industry. You if you really look at it basically the last two or three years, the cement bags are still at around whatever 300, three, 150 just keeps on ₹20 up ₹20 down. Nothing much happens. Basically those inflation may have been running away. So I'm saying consolidation is good and some of these undervaluation which we are seeing in in in several other companies should also benefit from this. OK. The second round companies might offset is India Cement. Do you think it is something which is going to be positive for whoever takes it over? So I think capacity and as far as the limestones are concerned, limestone capacity is concerned, I think yes, it is worth looking at it. But if you look at it historically, I think the company is not run up to Mark. We look at it historically. I think the margins and all that thing has continued to have a problem as far as India Cement is concerned. So whoever gets it basically it's a good capacity to do it. But I think we haven't looked at the cost because I think once he opens up as you were telling, then he has to make an open offer. Plus there is Mr. the Damani Group basically who owns 21% in India Cement. So who finally takes it basically is the call. And still I don't know how the whole thing is panning out. This is a management stake sale. Then management is now holding anything now or not, that is another question. So, so I think a lot of and merger with the Ultratech I was telling earlier basically it has to be CCI approved. So all those things have to work out. Plus the I think acquisition at these prices seems to be a little bit little bit aggressive. They are doing it according to our calculation something like a 90 to $100, which is I seem slightly higher than what we would have expected them to pay. But the larger point initial actually to watch out for is the way this space is getting consolidated for last 15 years, I have not seen any actual price hikes happen. It movements have happened in a 510% kind of range and still the the because of better efficiencies. Some of them are going green cement way. Ah, all of that financial you know kind of efficiencies the, the Abita have actually improved, improved of these companies. I am talking about five years down the line recently ah Adani Group Cement their shared their cement capacity addition, both organic in organic. If you just assume that it is actually a come blended, this Alderatech group also have put it on record. What is their similar addition plan five years far out when all these large 3-4 pillars would have got much more heft by capacity addition and inorganic put together? Then do you see any cement price uptick at least or would it all be about efficiency in the in the, in the lower in the in the PNL? So as I was telling earlier, basically that the last two years we've hardly seen any price hikes, though there has been, there has been cost hikes and they have been at best able to pass on the cost increases. I continue to believe. But I think with this consolidation happening now there are two large players emerging very clear, the Ultratech and Adani group. Earlier it was only Ultratech and then there was sporadic smaller players or 10/20/25 million, 30 million kind of thing. Now actually the third player is chili cement also. So I think 3 players are now emerging very clearly in the space that will lead to a consolidation and better price holding capacity. The only thing one we have to understand is basically that the major consumer is the government and they will always have a say in the prices. So you can make a decent are we, which I think most of them are making and that's why we've seen relating of the whole cement industry. But I'm saying out outlandish kind of our ways and all. I don't think so the the industry will be allowed to make because as I was telling, basically the government is the major consumer through because of the their investment in the construction in the initial we let you go. The market has opened right now and it seems like it's open in the If you like this video, then like, share and subscribe to ET Now.