Let me just talk about Asian Paints with you. Yes, the numbers are much below than what we were anticipating and the fact that their businesses have not performed well, which means the competition right now is eating into the business?
Sandip Sabharwal: So, this has been expected for the last three-four years that competition will come in and margins will get squeezed in the paints industry and that has played out and Opus has taken away some market share. They have induced price competition and as a result we have seen that value growth is less than volume growth.
Now, to look at things going forward, my guess is that we are now coming to a stage where the worst of the impact on profitability of competitive intensity seems to be getting into the price and depending on how the company performs from here on. So, I would think downside from here is limited.
Pace of recovery will depend on the pace at which profitability sustains and stabilises and volumes improve. But on risk-reward now after a period of three-four years we are now coming to a stage where as a contrarian investor one could start evaluating investing in this stock.
So, as a contrarian investor you can actually look at buying Asian Paints at this point in time is that what you said?
Sandip Sabharwal: Yes, now and spread it over few weeks because ultimately because the market scenario is also such that it is better to spread and buy because it is not that this stock is going to run away very fast very soon.
I also want to talk about the overall market because right now after some statements coming in from the Defence Ministry you have seen a sudden spike in the VIX, the market has taken a sudden fall. Sure, we have been consolidating also for the last three-four odd days, but do you think the market could get susceptible and sensitive to operation Sindoor?
Sandip Sabharwal: So, it depends on the speed and pace of escalation and how it gets resolved. Now, the fact of the matter is that from the perspective of the enemy country they will not be able to sustain for more than three-four days. So, it is a question of how big the escalation happens and how India retaliates. So, all this is in the air now. Very tough for us to evaluate what exactly is going to happen, but things will be much clearer a week from now, that is my guess.
If we were to fall further from here, other than Asian Paints which we discussed, where else would you look to perhaps add fresh positions or even where you think that there are opportunities and there is an oversold move in some of these select few sectors or stocks if you will, are you seeing any such opportunities?
Sandip Sabharwal: On the largecap side, companies which have been delivering and which are outperforming companies like M&M, Reliance, ICICI Bank, L&T or Bharti Airtel, all these on the largecap side all of them should be on the lookout to buy on declines and initially get into largecaps and then as the situation stabilises look at midcaps.
Since you do track L&T pretty closely, wanted to understand whether you think L&T could be susceptible to any global risk because some part of their revenue does come from global operations.
Sandip Sabharwal: So, the global risks have not increased in any way since over the last few weeks. If at all there have been talks to deescalate and the tariff situation, the talks are going on, and things are not worse than what they were a few weeks back. So, I do not see any impact of that per se on L&T.
