The biggest earnings yesterday came from Titan. If you account for the one-off that we have seen in Titan, it looks like a beat versus our estimates. Help us understand how one should look at these numbers if you do not account for the one-off and operationally, how does the quarter look like barring this one-off?
Rahul Shah: If you look at Titan’s number, in terms of this quarter and last quarter as well, one segment which has been doing very well in the entire retail segment is the jewellery segment. We have seen it in the numbers of Titan as well as the Kalyan. If I look at the growth, and if I remove the one-off, the numbers were in line with what the Street was estimating and what we were estimating.
What the Street is looking at right now is where there is a visibility and sustainability of earnings. So, with the way Titan is going on, one should definitely look at and have allocation in the portfolio post numbers.
What is your view on AU Small Finance Bank getting the approval and transitioning into a universal bank? How will that impact the financials of the company? How big of a positive is this news?
Rahul Shah: If you look at AU Small Finance Bank in terms of numbers or in terms of the way the growth trajectory the bank has got into since the last couple of years, the transformation to a full-fledged universal bank, is a positive for the bank and then to have more boundaries and to tap more customers as well as to raise capital also will become very easy for them. In my view, it is one of our preferred bets in our portfolio for investors as well. So, with the kind of growth, with kind of trajectory, and plus this positive news, one should definitely look at AU Finance as a part of their portfolio.
What is your view on Eternal?. After the block deal yesterday, it is in line with their strategy to keep the company an Indian-owned and operated entity. How are you seeing the kind of moves we have seen recently on Eternal given that their Q1 was slightly mixed? How do you think the growth is for the entire quick commerce, quick delivery sector going ahead?
Rahul Shah: If you look at, again, the domestic theme looks very interesting and it remains unaffected in terms of the global noises that we hear. So, what we are seeing in the markets is the domestic theme story will continue to do well. Obviously, we have seen the defensive and the platform stories of the stocks which have been doing very well in the markets in the last couple of quarters.
So, Eternal is also one of them. Numbers were in line with what the Street was estimating. Post numbers, and a better commentary, we saw the stocks moving up 15% post the numbers. That block deal for quite some time was a hangover for the company. But now, it is clear. One should definitely look at Eternal, one of the preferred bets for trading as well as investment. One should look at buying at these levels.Do you think there could be better alpha for a Swiggy perhaps and now with its MSCI inclusion as well, is there more valuation comfort in Swiggy than Eternal?
Rahul Shah: If I compare both, the valuation comfort is more on the Eternal side than Swiggy. But as I said, we are seeing an up move in the platform stocks section and this will continue to do well. So, one should also allocate for Swiggy. But if I have to select between the one, then Eternal plays a better role in this.Given the way PSU banks have come out with their numbers so far, what is looking attractive from this group of stocks?
Rahul Shah: If we look at the trend in the PSU banks, NIMs have shrunk for most of the banks plus, there have been a stagnant quarter on quarter as well on that front. That is the most important thing we should look at in State Bank’s numbers as well. The second most important thing is commentary and with the kind of growth trajectory that we have for the next year or so or maybe looking like this quarter and what we have been hearing in the global noises.
In the case of most of the private banks numbers, at least in the largecap space, HDFC and ICICI numbers were pretty strong. If we compare with Bajaj where they have been talking about some slowdown in MSME plus the unsecured loans getting a little bit jittery as is the case in most of the MFIs. My view is the largest bank, for State Bank, reporting their numbers, this will be a concern for them. For the rest, the outlook is more important for them. So, we should not forget that they just had a good round of QIP and the demand was quite good for that.
Any weakness in the stock in case could be a temporary and the valuations look very attractive at this price as well. We also believe that the BFSI segment will continue to do well. So, my sense is, it is important to look at the commentary and that will be the trigger for the stock as well.
Given that the earnings have been quite resilient for Bharti Airtel and we have seen outperformance on a YTD basis as well, if the stock is available at a 3-4% discount, that will be a good opportunity to get in?
Rahul Shah: For telecom, last quarter was a bumper quarter for the sector as a whole. After a long time, we saw a positive in terms of sector profitability. This quarter, if we look at Bharti came out with a strong set of numbers. In the African operations, domestic – margins were in line with what the Street was estimating. So, a good set of numbers. Also, this is one of the best performing stocks in Nifty in the last one year.
So, the numbers were strong and if you get something at 3% discount, these are the 15-18% compounding stocks for the next two-three years in India with the kind of growth in terms of data as well as in terms of telecom overall in the fibre space as well. So, look to buy Bharti Airtel if you get a 3% discount from the current price.