Market Guru in talk with RJ Salil Acharya of Radio City: Buy TCS shares in retail and tender them in the buyback
Anil Singhvi, Managing Editor, Zee Business, says the budget would have been a populist or money distributing budget in view of the Uttar Pradesh Elections and farmers’ movement but it is not such.
Anil Singhvi, Managing Editor, Zee Business, says the budget would have been a populist or money distributing budget in view of the Uttar Pradesh Elections and farmers’ movement but it is not such.
This Budget 2022 is a balanced budget. During a candid radio podcast, 'Kadak Currency’, with RJ Salil Acharya, Radio City, 91.1 FM, Mumbai, Mr Singhvi said people can invest in Tata Motors DVR, TCS, selective real estate stocks and public sector stocks.
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RJ Salil started the podcast, 'Kadak Currency', said initially there was a short-term view on the budget as there is no change in the tax slab or anything that we all were expecting. But from a long-term perspective, the market has also given a thumbs up to the budget. Do you expect that eventually it is good for the market and our growth engine as the capital-intensive projects will provide a lot of jobs? Mr Singhvi in his reply said the task of the budget is to give a direction to the economy and the country and the way it is moving, at what pace it is happening and what needs to be done for that. Thus, it is a policy document. Most of the budgets presented to date were made to give shocks where either tax was slashed or increased, something turned cheap while something became costlier. But, now, the government is gradually bringing the budget as a policy document and direction and from that aspect, the budget is absolutely perfect. In the budget, the government is clearly saying that the government's focus for growth is tremendous, not just for a year but for the next 25 years. The capital expenditure (CapEx) of Rs 7.50 lakh crore, which is the highest to date and double compared to the CapEx of 2019. This gives a sense of how the government is going to make a huge investment for the growth of the infrastructure and the rest of the economy. So, from that sense, this budget is absolutely 100% successful. Apart from this, the policy direction that is needed in other things has been received.
To which RJ Salil asked, this means you are not disappointed or do you think we can see the effect very soon? To which Mr Singhvi said, I am not disappointed at all but yes everything is not perfect and there can be some improvement in it. If the finance minister would have done two things, then I would have said that this is a perfect budget and no mistake can be found in it. They are:
(i) Middle Class: People like you and me should have been provided with some more money, some tax cuts were needed, especially post COVID when we are out, the expenses have increased, medical expenses have gone up and home expenses have also moved up due to the work from home, there would have been some relaxation in terms of tax, whether by reducing the tax rates or by increasing the slabs. The finance minister has missed on this big thing. It would have also benefitted in the sense if people would have had more money in their hands, then the consumption would have increased and the economy would have grown. One more thing is that when the tax rates are low for the companies, your tax collection has increased by 40%, which is at an all-time high. This means, the lower the tax rates are kept, the tax collection and efficiency will increase. So, I think, the finance minister has made a miss.
(ii) The second thing that she missed is to give a boost to the housing and the property market, she would have focused a bit on the real estate market. She would have provided some more concessions in the segment, especially in the interest that we pay on the home loans that. If a big boost would have been given to the real estate sector, then there are 400 to 500 more such industries, which starts moving automatically with the real estate.
Continuing the podcast, 'Kadak Currency' further, RJ Salil said, it is a bit confusing why the real estate sector was not given a boost because the builders were expecting a lot. Replying to this Mr Singhvi said, when it comes to expectations, we all do it and the builders always have an expectation. Perhaps it seems that the finance minister would have thought that when the vehicle is running then it's fine if it stops then will push it. The second thing is that maybe the finance minister would have saved it for the election budget which will be announced in a year or two with a hope that whatsoever we have to do will be done then. One thing is there to be seen and understood that in the view of the Uttar Pradesh election and the farmers’ movement, it could have been a big populist and from the farmers perspective a subsidy increasing and money distributing budget, but the finance minister has avoided it. So, in that sense, it is quite a balanced budget and there is no doubt about it.
In his next question, RJ Salil asked about the sectors that can be in focus now and investments can be made for the next three to six months? Anil Singhvi said, companies linked to the capital expenditure, i.e., the capital goods companies that are into the business of plants and machinery and companies linked to infrastructure will be in focus, maybe real estate has not been in focus but the sector will remain in focus. Apart from this, the new-age companies as the government have a special focus on digitisation and a lot of work can be done here. So, these are the sectors that will remain in action in the future as well. Although the list is long.
After this, RJ Salil said, LIC has been discussed and it is being said that it will be launched in March. So, what would be the expectations from it as you always have said that the pricing should be right after which the IPO seems attractive. But do you think that it is a must-buy for everybody? To which Mr Singhvi said, I will be able to tell you only after the final price comes let’s see how the LIC IPO is priced. It is going to be the largest IPO ever, undoubtedly, so it is obvious that it should be that attractive that we jump for it with a call, even I want LIC. It should not happen that the way I don’t need a policy, I don’t need your share. Because, usually, the LIC Is sold to the people, it is not bought, it had to be sold with great difficulties. Now, the awareness has increased a bit. I think we will be able to understand about it only after the pricing is out how attractive the IPO of LIC is. But as an institution, LIC is excellent and there is no doubt in it.
In his next question said we have seen a crash in Zomato while the crash in Paytm was huge in which it fell from Rs 2,100 and running around Rs 950 at present. But when it is a government’s IPO as LIC is a public IPO. Do you think that such fluctuations will be seen in public IPOs like LIC? Mr Singhvi in his reply said, no, nothing like Zomato and Paytm will happen, after all, it is LIC, it has the power to become the largest company in the country. It is a solid company with a long track record of money-making, profit-making and distributing company. There will be no such accidents in which it will fall by 25-50% as soon as it is listed. It will not happen but how much it will increase will depend on how it is being priced.
Further, RJ Salil said there has been a lot of focus on airlines and in between the Supreme Court asked SpiceJet to repay the money – it has a loan worth Rs 125 million – or wind up your business. On the other hand, Air India has been taken over and Jet Airways is being discussed and talks are on for the Rakesh Jhunjhunwala-backed Akasa Air. Do you think that the year 2022 could be a year when a lot of movements can happen in airline stocks? To which Mr Singhvi said, I have doubt. I can’t do it, neither I will invest in it nor advise to invest in them. It is such that you, me and our listeners do not have a lot of money, it is not such that a lot of money is available with us, it is limited. And, if we have limited money then we will invest at places where we are more confident. The sector is in avoid zone for me.
To which RJ Salil asked, can there be some advances in Tata Group as their investments are spread all over, especially for Air India, and can people can concentrate a bit on it and have a look at it or it is a straight no? Mr Singhvi said, 100%, especially, I like Tata Motors a lot as well as its DVR, a stock that is listed separately. I also like Tata Power. Apart from this, Tata Communication and the rest of the leading companies are doing well and those who want large-cap stocks to be safe can buy TCS comfortably and blindly. In between, it came down to 3,650-3,700 and there is a buyback at 4,500, so, buy comfortably in the retail category and submit it in the buyback. You will easily make returns of 7-8% without much risk. I think, Tata Group is fantastic in itself and a lot of companies are there who are providing a chance to you but you have to walk safely. It is simple that you should buy the shares of TCS and tender them in the buyback.
RJ Salil asked for the stock recommendations from him to which Mr Singhvi said, I have already talked about many and all these stocks like Tata Motors DVR, I like it personally, I also like TCS. In addition to it, you can take selective shares of the real estate sector and I am continuously bullish on textile, public companies and you have good opportunities to buy in these stocks. The biggest thing is you can buy stocks of the companies linked to capital goods; L&T has already grown but the list is long where you can buy.
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