Sandip Sabharwal won’t buy into Havells, Polycab, KEI. Here’s why

economictimes.indiatimes.com:

Sandip Sabharwal, asksandipsabharwal.com, says they do not own any of those stocks and he is not looking to buy also because the entire re-rating in wires and cables was beyond his understanding. He feels Valuations will come down to reasonable levels at some stage, but given the commodity nature of the business, he does not like these businesses so much.

Sabharwal also says that the bull market has shifted investor perception about what stock valuation means to new investors. About two years ago most investors accepted a stock price-to-earnings ratio of 12 to 15 for midcap stocks but rarely exceeded 20 PE when purchasing stocks. Since the market corrected, many midcap as well as smallcap companies currently maintain PE ratios at 50-60 levels.
First, let us talk about UltraTech Cement. I guess the market is clearly not liking this diversification. What explains the downtick on the stock today?
Sandip Sabharwal: When they went into paints, it seemed like a natural progression because cement, paint, similar kinds of distribution channels although the retail channel could be somewhat different and the usage patterns could be the same. Cables and wires is a somewhat different industry, although they are talking about the entire building segment and covering all aspects to it.

So, some parts of the markets would be taking it as an unrelated diversification and that is the reason the stock is falling because if your cement business is doing well, if paints goes in from losses to profits, then shareholders would expect