One can strike gold in pharma; consider Ola Electric after 6-9 months: Dipan Mehta
Dipan Mehta, Director, Elixir Equities, says gradually, a lot of the factors have improved for pharma companies and I am very positive on the pharma sector. That will be the target sector in the event of a correction and we like to be overweight pharma. Structurally, some things have changed in the US generic market and they are now able to get at least a fair price for whatever they are selling over there.
What has been your key takeaway from Hero MotoCorp's quarterly performance?
Dipan Mehta: The performance appears good, but the problem is the sustainability of the numbers going forward. While they have been able to increase their market share, the new products that they have launched are highly successful and that is helping them gain the market share. The raw material costs have been pretty. On the lower side, they have been stable and therefore, operating profit margins have gone up and operating leverage has come into play.
But we are seeing an overall slowdown in consumer spending and there is stress when it comes to big-ticket items as we have seen in many other companies. Sustainability is a bit of an issue. Monthly sales numbers have come off for Hero MotoCorp. There is one silver ray of hope and that is the monsoons. It is 7% above normal and that increases agricultural income.
Hero MotoCorp has great exposure to the rural and the agricultural sectors, so you could see some bump up in demand over there. But urban consumption is under stress and that may affect or balance out whatever gains they have
