Porinju Veliyath Hints Multiyear Bull Run With Stable Government

Porinju Veliyath Adds 360-Degree Approach Towards Markets and Talks About His Holdings In A Latest Interview With ET. Here're The key points from the interview for you.

Porinju Veliyath in his latest interviews said that, In the upcoming 18 months, Nifty is expected to rally by 2000 pts. Furthermore he added that many mid and smallcaps can go up by 100% in the next 18 months.

While commenting about the sustainability of the broader markets Porinju Said, markets have just started the rally and there is a long way to go. Also he added that betting on the largecaps would not be possible and recommended every time one need to realise the potential of the markets and act accordingly.

Going ahead, according to him Indian stock markets have started their multiyear bull run where he notes that a multiyear bull market can be considered even the investors can make returns at 15% CAGR. He said, that every investor in the current market can see the future direction of the market as India is growing today with the Low-Inflation environment.

When asked about the extra optimism and stable governement of BJP, Porinju has proudly mentioned that he strongly belives in the current regime and expect to Modi to be the PMO for next 5 years but at the same time he added that there is no need of the extra optimism with the election results. he suggests investors stick with the potential businesses. According to his views point, without any extraordinary optimism, Nifty can rally 2,000 points whereas many stocks from of mid and small caps sections can rally by more than 100% in the next one year, 18 months from here.

Further while adding value to his investment strategy that is bottom up approach which he seems suitable for 2019 post election period to shortlist the best stocks. Mr. Porinju Veliyath has highlighted that the approach can reap returns ahead. While shedding some light on the topic he said, We have had a big meltdown in small and midcaps in general. The meltdown was across the board. If you look at 2018, everything was falling in the mid and smallcaps. When I say mid and smallcaps, I am talking about the way 90% of listed companies fell. Maybe one week, the HFCs were falling. The fall in different segments continued. That was a bear market but a short bear market. We had almost 13 months of bear market but without affecting Nifty and Sensex. I am not a technical analyst but I just was told a broad market bear market sustains for 12-13 months. We have completed that normal historic average of 13-months bear market. That also is adding to the optimism of a bull market ahead.

The bottom-up approach is the right approach the market has because we have so many varieties of segments and industries in India and in the broad market meltdown, good ones, bad ones, the kachra (junk) ones, everything has fallen. So there are a lot of great small and midcap companies in India which can give you say 100% return. Some of them in the next one year because they were beaten down like that and even after the 100% return from here, they may be below their last years high. So, that is the most interesting aspect.

I do not think that when I say hundreds of Indian small and midcaps can give you 100% return. It is not very huge. It is only reversal of the deep correction and these companies are growing at 15-20%, they will continue to grow for next 5 and 10 years looking at the demographic and consumption pattern and practice in India.

The period of extreme pessimism is behind us. We do not want an optimistic mind; a normal or rational approach would do. Look at the way FIIs have been buying in the last two weeks. They have bought stocks worth around Rs 25,000 crore. This is huge and this is after selling of Rs 50,000-60,000 crore last year.

I expect a minimum of Rs 1 lakh crores of FII buying in this 2019 that is very much possible. They have been ignoring Indian markets for a while and ultimately many investment gurus globally, people with track record have been talking about the India and China story the emerging market story. If our reforms and political initiatives to manage the economy continues, nobody can stop, nobody can even think of a bear market in India.

When asked about the Equity Intelligence's holdings and plans, Mr. Porinju's answer was satisfying he said that, they are maintaining the hold and mentioned the reasons behind the same. here the reasons mentioned by him-

Kaya:
We have a large holding in Kaya and it is a very long-term buy. We are betting for next two, three, five years time and so we have been buying the stock. Whether we will buy from tomorrow, I cannot talk about it. Otherwise, I like the promoters, the concept. It is a very tough business to do and it is one of our largest holdings in PMS. We will continue to hold the stock.

Zee Media:
Zee Media is one stock where we have a holding. The stock used to be Rs 30-35 and just because the promoters had a problem, the stock came down to Rs 11. Now that is the kind of volatility the market is going through, especially in the smaller midcaps. This is a well-managed company. The promoter personally is not managing this company. They have recently quoted the highest-ever quarterly profits in the history of the company and that was the time the stock price came to the lowest-ever in the history. We like the stock at the current value as we continue to hold.

Leel Electricals:

We were betting on Leel in a big way because they were selling the consumer division, they sold it to Havells and received Rs 1,500 crore. Today the market cap of the company is below Rs 100 crore. So, you can imagine how much money was stolen by the promoters from the company legally and illegally It is amazing the kind of chori (stealing) is still going on. It is rampant among the listed companies in India.
This is the biggest challenge when you pick bargains or hunt for values in the mid and smallcaps and an investor had to live with that.

GVK Power:

There are a lot of infrastructure companies with leverage. There are a lot of grey areas and newly created ones following delays in debt resolutions. The banks attitude changed since last one year.

There are many grey areas and black spots and there is lack of clarity. We have been basically betting on the airport business vertical of the GVK and that is still there. It is very valuable but on other side, there are more liabilities and delays than what we expected at that point of time of investing.

If debt resolution happens and the company becomes debt free, with the stake in Mumbai Airport and more airports, it can be a wealth creator. But there are ifs and buts and so I have no comments for the fresh investors about it.

At the end he mentioned his optimism about the market with the below comment and suggested investors the era which they are going to face ahead.

I am very optimistic about the future of Indian economy and many of these reforms like GST and IBC and all they are irreversible. Even if another government takes control, these things will continue though it may be at a lower pace. Indian equity investors will be going through a very optimistic environment for the next at least a couple of years.

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