Which pockets will see profits decelerate, remain flattish, or go up in Q1? Pankaj Tibrewal answers
Pankaj Tibrewal, Founder & CIO, IKIGAI Asset Manager, says durables, some of the value retailers, and some of the names on the staple side would be a good way to create a basket to see the revival in consumption over the next 12-18 months.
What is the outlook on the defense basket, the darling of the market last year? For instance, on Thursday we did see quite a bit of fervour building up into these stocks. Are you looking at this space for the long haul as well?
Pankaj Tibrewal: Yes, we were positive on defence but now I think the stocks are pricing in much more than what is expected. I think the next few years' order inflow and earnings growth are already built into the stock prices and do not forget that many of these stocks do not have a large free float, so the prices and the market cap that we are seeing may not be the actual ones which probably should be through the price discovery mechanism and we believe that there is a lot of froth in the space building up on expectations that this kind of order inflow and growth will continue for a long period. So, we need to be a little careful.
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The second point that I want to make is that many of the businesses in this space would not generate very great operating cash flow and today the narrative is that just follow the order
