Dipan Mehta on how to play a high-risk, high-return idea & where to invest in IT sector

economictimes.indiatimes.com:

Dipan Mehta, Director, Elixir Equities, says “Ujjivan Finance is one company we are quite positive on and it would be a perfect tactical play because once the merger takes place, the cost is going down and from a valuation multiple, it is very attractive compared to other microfinance companies. There is scope for the PEs to be re-rated and in the next three-four quarters, there is no threat of NPA. We will see a nice runway for earnings growth for Ujjivan Small Finance Bank."

Would you call it a tactical trade or more a high-risk, high-return idea where the shelf life could be 6 to 12 months in your portfolio? Every fund manager has different tactics. Some stocks you buy are classic compounders. Some stocks you buy because they are cheap, but there are also some tactical and special situation stocks which you are tempted to buy depending on the lay of the land and depending on the terrain and what the company has to offer.
Again, disclosure, there is Ujjivan Financial Services.

It is getting merged into Ujjivan Small Finance Bank. There is an arbitrage opportunity over there as well because if you buy the holding company and when it gets merged, the actual cost of the acquisition of the final listed company that is Ujjivan Small Finance Bank, you may get some arbitrage over there and we are particularly bullish on the microfinance space and this particular entity is one of the largest microfinance players and within the microfinance, we realised over the last 5-10 years is that it is important to have geographical diversification.

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