“There are some Adani companies which have good value, something like Ambuja Cement. Consolidation is happening plus they are putting in more capex there. That is one stock I am positive on as far as Adani Group companies are concerned. The other one would be and the third will be Adani Port,” says Neeraj Dewan, Director, Quantum Securities.
In terms of FMCG what should one watch out for because differentiated commentary is coming in from different kinds of people post Diwali and the sort of demand they have witnessed?
Basically the rural demand has to pick up. That has not picked up. If inflation is coming down, maybe in another two-three months, the base effect of inflation will start playing. If the inflation comes under control, we may see some profitable margin improvement there but the top line, which has been not that great in the last quarter, may take another two-three months to come back. There may be some more consolidation as far as the FMCG names are concerned.
In terms of FMCG what should one watch out for because differentiated commentary is coming in from different kinds of people post Diwali and the sort of demand they have witnessed?
Basically the rural demand has to pick up. That has not picked up. If inflation is coming down, maybe in another two-three months, the base effect of inflation will start playing. If the inflation comes under control, we may see some profitable margin improvement there but the top line, which has been not that great in the last quarter, may take another two-three months to come back. There may be some more consolidation as far as the FMCG names are concerned.
What about ? Today marked Mukesh Ambani’s 20 years at the helm. A lot of transformation has happened as far as is concerned over the last 20 years. What about the next 20 or at least 2 years as far as the stock price is concerned?
The stock has been consolidating in the Rs 2,400-2,700 range. A lot can happen as far as Reliance is concerned. The retail business can get listed as a separate entity. Jio can get listed as a separate entity. They are spending a lot of money on renewable power, hydrogen. For a long-term investor, it will still pay to stay invested in Reliance Industries and the kind of returns that one can get going ahead is also in the same percentages that we have been getting. There are a lot of business in the company which can get demerged and get listed separately.
You tracked midcaps pretty closely and there was a significant correction. Is any of these agri commodity names looking interesting? Stocks like Venky’s, others have really not done anything for a long time now?
I think sugar stocks look good because the kind of prices we see internationally, The prices have again reached last year’s high plus the new contracts which are happening domestically are also happening at higher prices.
The stocks had corrected from the highs of May, June and we still have not seen too much upside from those levels. They must have come up by 10-15% but I still think there is scope as far as sugar is concerned. Venky’s may see some more consolidation because commodity prices saw some correction and have not really seen the kind of prices that ideally would be good for them.
Second, even the realisation is not going up too much as far as the poultry business is concerned. This is supposed to be a strong quarter for them but they have not seen that kind of a demand to take the prices up. They have just seen a 2-3% upside in the realisation. This quarter should also not be that great but going ahead, definitely it is a good company and with no comparable listed space, at these prices, if one is a long-term investor, one can accumulate these on dips.
What about the Adani Group of companies? If 2022 belonged to someone, it was clearly Mr Gautam Adani with a $58-billion surge in his wealth. He has added a whopping Rs 1,600 crore per day to his wealth in 2022. Even the shareholders have made quite a bit of good return in 2022. Do you expect this to follow in the next year?
I think it is going to be more stock specific even in that group. There are some companies which have good value, something like Ambuja Cement. Consolidation is happening plus they are putting in more capex there.
That is one stock I am positive on as far as Adani Group companies are concerned. The other one would be Adani Wilmar, which saw good corrections. The kind of pressure which was there on the margins in their cooking oil business. Adani Wilmar in the next one, one-and-a-half years can give decent returns.
The third one can be which has also good value. It is going to be more stock specific there. One should still get returns but one should know which company and at what value you are investing in.
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