Be selective in pharma; OMCs can be trading plays: Sandip Sabharwal
Sandip Sabharwal, asksandipsabharwal.com, says “OMCs have become uninvestable because of the price gaps which have been put on petrol, diesel prices. We do not know what profits will come as the free pricing regime has virtually effectively ended. I do not think these companies are investable. On the other hand, Oil India, ONGC etc are very inefficient companies. So some price uptick will lead to some uptick in stock prices, but they are more trading plays.”
What is your outlook on how things are shaping up within the entire pharma space? Going by the valuations and the kind of domestic market growth that we have seen, are you being very selective when it comes to pharma?
Yes, I am always very selective. Although some of the smaller pharma companies have done well, many of the smaller pharma companies do not have cash flows to support their valuation. I just try to stick to the larger ones. We have Sun Pharma as our core holding, Lupin as a contrarian bet, which we took a year-year and a half back. That is doing well. So these are the two holdings we have. But overall, pharma is still a reasonably under-owned space. So if the performance is improving, we could see the stocks do better.
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Offering CollegeCourseWebsiteIndian School of BusinessISB Chief Digital OfficerVisitIndian School of BusinessISB Chief Technology OfficerVisit This is almost a consecutive trend that you are seeing. In the case of real estate companies, all of their quarterly updates and collections have been fabulous and the pre-sales figures have seen a massive uptick.
That is true and it has been a bit surprising how the real estate sales have held up, especially for many of the South-focused
