So, it is more like a wait and watch for now.
"Fertilizer sector is definitely a long-term space to be invested in, but it is important at what price you enter. You should enter into these stocks when no one is talking about it and the stocks correct 10-15%," says Neeraj Dewan, Market Expert.
Want to get your sense on the QSR space that we have seen. It has been an unexpectedly good quarter coming in for QSR. If you talk about select companies like Jubilant has done well, Westlife has done pretty decently. Yesterday, we had numbers for Restaurant Brands Asia also they have also done very well. So, seems like there has been a recovery both in the delivery and dining segment. What are you making of this sector? And do you believe that now this is time for a turnaround for QSR because it has been absolutely lacklustre for the past couple of quarters?
Neeraj Dewan: Yes, actually, there has been disappointment earlier from the QSR segment. A lot of these companies had corrected and they had not done well, but because of the inflation scenario, inflation is also coming down and it is staying low, so that scenario should continue for some more time and we have seen some demand pickup happening for these companies so that should continue for some time more because of the raw material cost pressure coming in control, but I do not have any specific buy or exposure in the sector, but according to my understanding after seeing the Jubilant Food result, I am positive that this trend should continue for the next couple of quarters at least.
Let me get your view on fertiliser space because we tend to only speak about this sort of a segment or the space just in the run-up to budget because everyone is hoping that there would be some subsidy announcement from the government or we talk about the fertiliser space just in and around the monsoon season. Do you think that this one is a long-term investment opportunity or given the fact the volatility and the regulations that surround it, it is a very dicey sector to be invested in.
Neeraj Dewan: Yes, it is definitely a long-term space to be invested in, but it is important at what price you enter. You should enter into these stocks when no one is talking about it and the stocks correct 10-15%.
You do not see major corrections also happening in fertiliser space because our country this is a very important space and the demand picks up around this monsoon time and before the budget is definitely more of speculative buying, some returns expected because of the subsidy announcement but around the monsoon the pickup happens because demand also picks up now and then going ahead with the kind of monsoon forecast we have demand should pick up and there will be a strong demand for the space and the prices in the stocks will also reflect that.
Though because of the international prices going up if government also gives some subsidy to cover the companies from the additional pressure which may happen in the margin, that will also be somewhat positive for the companies. So, it is a long-term investing sector, but one needs to be very careful what stock, at what prices you enter once you make a long-term investment.
Let me get your view on the OMC space because that entire space was quite heated up given the fact that you saw the sharp drop in crude oil prices, everyone started putting focus on the OMCs, there was also the dollar drop also that actually came by along with it, that also boded well. What is your take now for the OMCs? If you are actually trying to gauge this one on a longer-term structural story, do you think it really makes sense?
Neeraj Dewan: If one is invested, one should stay invested because the momentum is strong and there is very good possibility that the oil prices will stay low and may drift a little lower from these levels also. So, it is a momentum play which one should stay invested.
As far as the long-term structural story is concerned, I am not too sure of that because somewhere down the line even domestically prices need to trend low as far the petrol prices or the diesel price are concerned at the petrol pump, so that may also have some impact whenever it happens. But for the time being one can stay invested with the momentum still looking strong.
Just want to get your sense on Eternal. Now, this stock has been in focus ever since its earnings, that day when the numbers were slightly tepid, you had the stock that went up, ever since then that stock has been consolidating. We now have news flow on this stock that the shareholders have approved for the 49.5% stake when it comes to that cap on foreign ownership. Tell us how if at all this could have any ramification on the stock considering that now this is largely going to be DII owned and what is the outlook going ahead for Eternal? Also, if you compare it at par with Swiggy, it has been doing comparatively better. So, what is the take on Eternal?
Neeraj Dewan: Last results were pretty disappointing and the news flow is also not very positive. The kind of capex that is being put behind the quick commerce is too high and that is something where a lot of competition is also going to come their way.
So, I would rather than the news flow regarding the DII ownership, I would focus more on the business where I feel there is strong competition which is going to come their way. So, one needs to be really careful at what price you get into this because right now it is more of a wait and watch and see, if the internals improve, if the numbers improve going ahead.
So, I would rather see couple of more quarters to see what is the trend which is happening, the kind of growth that we are expecting from the quick commerce will that continue or not, so that is what is important to watch. So, it is more like a wait and watch for now.
Want to get your sense on the QSR space that we have seen. It has been an unexpectedly good quarter coming in for QSR. If you talk about select companies like Jubilant has done well, Westlife has done pretty decently. Yesterday, we had numbers for Restaurant Brands Asia also they have also done very well. So, seems like there has been a recovery both in the delivery and dining segment. What are you making of this sector? And do you believe that now this is time for a turnaround for QSR because it has been absolutely lacklustre for the past couple of quarters?
Neeraj Dewan: Yes, actually, there has been disappointment earlier from the QSR segment. A lot of these companies had corrected and they had not done well, but because of the inflation scenario, inflation is also coming down and it is staying low, so that scenario should continue for some more time and we have seen some demand pickup happening for these companies so that should continue for some time more because of the raw material cost pressure coming in control, but I do not have any specific buy or exposure in the sector, but according to my understanding after seeing the Jubilant Food result, I am positive that this trend should continue for the next couple of quarters at least.
Let me get your view on fertiliser space because we tend to only speak about this sort of a segment or the space just in the run-up to budget because everyone is hoping that there would be some subsidy announcement from the government or we talk about the fertiliser space just in and around the monsoon season. Do you think that this one is a long-term investment opportunity or given the fact the volatility and the regulations that surround it, it is a very dicey sector to be invested in.
Neeraj Dewan: Yes, it is definitely a long-term space to be invested in, but it is important at what price you enter. You should enter into these stocks when no one is talking about it and the stocks correct 10-15%.
You do not see major corrections also happening in fertiliser space because our country this is a very important space and the demand picks up around this monsoon time and before the budget is definitely more of speculative buying, some returns expected because of the subsidy announcement but around the monsoon the pickup happens because demand also picks up now and then going ahead with the kind of monsoon forecast we have demand should pick up and there will be a strong demand for the space and the prices in the stocks will also reflect that.
Though because of the international prices going up if government also gives some subsidy to cover the companies from the additional pressure which may happen in the margin, that will also be somewhat positive for the companies. So, it is a long-term investing sector, but one needs to be very careful what stock, at what prices you enter once you make a long-term investment.
Let me get your view on the OMC space because that entire space was quite heated up given the fact that you saw the sharp drop in crude oil prices, everyone started putting focus on the OMCs, there was also the dollar drop also that actually came by along with it, that also boded well. What is your take now for the OMCs? If you are actually trying to gauge this one on a longer-term structural story, do you think it really makes sense?
Neeraj Dewan: If one is invested, one should stay invested because the momentum is strong and there is very good possibility that the oil prices will stay low and may drift a little lower from these levels also. So, it is a momentum play which one should stay invested.
As far as the long-term structural story is concerned, I am not too sure of that because somewhere down the line even domestically prices need to trend low as far the petrol prices or the diesel price are concerned at the petrol pump, so that may also have some impact whenever it happens. But for the time being one can stay invested with the momentum still looking strong.
Just want to get your sense on Eternal. Now, this stock has been in focus ever since its earnings, that day when the numbers were slightly tepid, you had the stock that went up, ever since then that stock has been consolidating. We now have news flow on this stock that the shareholders have approved for the 49.5% stake when it comes to that cap on foreign ownership. Tell us how if at all this could have any ramification on the stock considering that now this is largely going to be DII owned and what is the outlook going ahead for Eternal? Also, if you compare it at par with Swiggy, it has been doing comparatively better. So, what is the take on Eternal?
Neeraj Dewan: Last results were pretty disappointing and the news flow is also not very positive. The kind of capex that is being put behind the quick commerce is too high and that is something where a lot of competition is also going to come their way.
So, I would rather than the news flow regarding the DII ownership, I would focus more on the business where I feel there is strong competition which is going to come their way. So, one needs to be really careful at what price you get into this because right now it is more of a wait and watch and see, if the internals improve, if the numbers improve going ahead.
So, I would rather see couple of more quarters to see what is the trend which is happening, the kind of growth that we are expecting from the quick commerce will that continue or not, so that is what is important to watch. So, it is more like a wait and watch for now.
