Dalal Street Voice: Planning to invest in new age business? Gurpreet Sidana has some valuable advise for retail investors

We feel the prudent approach is to invest only a small portion of your investable corpus in these companies in a staggered manner as they’re richly valued and stay invested with a time horizon of 3-5 years, Gurpreet Sidana, Chief Operating Officer, Religare Broking Ltd – said in an interview.

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Sidana has more than 20 years of experience across the financial services and capital markets industry. He is a Chartered Accountant by Profession and before joining Religare Broking he was associated with SBI CAP as Head Retail Broking.

Edited excerpts:

Q) Market remained volatile throughout last week, but it looks like there is selling pressure at highs. Is the Street factoring in a sooner than expected rate hike from US Fed as well as commentary from RBI also hinted that?

A) The inflation worries are for real as the US inflation has hit a 30-year high and markets have a tendency to quickly adjust to reality.

Besides, the rise in the COVID cases globally is also weighing on the sentiment and has triggered volatility across the globe including India.

Apart from the global factors, domestic cues were also not very encouraging which further added to the pressure.

Q) What are your takeaways from the September quarter results? And your outlook for the rest of FY22 earnings?

A) The recent earnings season was a mixed bag as the revenue grew strong, but the pressure was seen on margins due to the rise in input cost as well as other income.

For H2FY22, we have a positive outlook and believe there would be broad-based recovery, driven by improvement in demand, product mix, capacity addition, and price hikes.

Q) What are your views on the new age IPOs and what factors one should keep in mind before pressing buy or a sell button?

A) You would find mostly new age IPOs having good revenue growth but still incur losses due to their substantial spending towards advertisement, promotions, and employees, etc.

These companies cannot be valued by traditional methods and investors should try and understand the sector in which they operate, their strategy & future growth prospects. Also, they should analyze their market share (gaining or losing) and financial trend for cues.

Q) It is said that maximum wealth was created by tech-based companies especially in the US – can Paytm, Zomato, Nykaa or Policybazaar remain relevant in near future and turn out to be next big wealth creators?

A) These new-age tech companies certainly have the potential to grow exponentially with the noticeable surge in the digital economy.

But, it is difficult to pinpoint which company is going to make to it that list as most are currently loss-making and will take time for breakeven and eventually turn profitable.

We feel the prudent approach is to invest only a small portion of your investable corpus in these companies in a staggered manner as they’re richly valued and stay invested with a time horizon of 3-5 years.

Q) The recent correction has given enough opportunities to investors to get into markets or buy stocks. What will be your advice to retail investors especially the one who have not seen many market cycles?

A) We advise maintaining a systematic approach to investing instead of trying to time the market. And, new investors should not venture into unknown territories or invest based on borrowed conviction.

They should ideally stick with the proven stocks and accumulate them gradually on dips with the long-term view.

Q) Real estate seems to be making a comeback. What are your views on the sector?

A) Real Estate has seen a strong pick-up led by strong pent-up demand, attractive interest rates and increased government impetus on housing for all.

We believe the growth momentum to continue and expect large organized players to continue to gain market share. Further, given the sharp run up already, we would recommend investing only on dips.  

Q) UBS revised GDP estimates to 9.5% from 8.9% earlier for FY22. Many other agencies also revised their estimates upwards. What are your views? Do you think we are slowly coming back on track of high growth but Street has more or less factored that in the recent run up?

A) Several domestic factors like better-than-expected demand recovery, easing lockdown restrictions, slowing COVID cases, and moderate inflation have led the agencies to revise the growth estimates higher.

We expect the growth momentum to continue led by the increased pace of vaccination. Moreover, increased tax collections would also propel growth for the economy as the government would look to spend on key sectors like infrastructure.

However, the markets have priced in the recovery but there could be surprises on the upside.  

Q) Where is the smart money moving? Although FIIs might be selling in Indian markets but they are putting money in IPOs?

A) It could be due to the stretched valuation after the noticeable surge in the last two years and they are realigning their investments.

The inclination towards the new age businesses may have prompted them to book some profits and invest in these IPOs. But, the risk of inflation and faster-than-expected rate hikes have turned investors quite risk-averse.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)