EV theme is ahead but still, Auto sector is not in the limelight: Rajeev Thakkar
In the recent media interview, he has shared what should be the behavioural expectation of retail investors and his opinion on deep value zoned companies like ITC and Hero MotoCorp.
Rajeev Thakkar is the Chief Investment Officer & Director at PPFAS Asset Management company. He has more than two decades of experience in the market. In the recent media interview, he has shared what should be the behavioural expectation of retail investors and his opinion on deep value zoned companies like ITC and Hero MotoCorp.
For a while now, high ROC, high ROE companies have been showing stable growth. People have been just rushing into them and pushing up earnings multiples far above what is reasonable. Some of these well-managed companies which have fallen out of favour, in five-six years they could make a comeback.
Auto in specific has been having this fear of the big transition towards electrification and electric vehicles and whether the incumbents win or whether the challenger companies will. That overhang has been there and the demand has been subdued. A large section of the population has been working from home or not moving around too much. Once things normalise and income comes into people’s pockets, once people start moving around, the auto demand will come back. A lot of incumbents already see the writing on the wall and have their EV strategies in place. We are not as pessimistic about the overall auto space.
Golden advice for retail investors
If one is monitoring the stock prices or the NAVs or the indices on a day to day basis, then surely one feels a lot poorer if stock prices come off 10%, 20% or the NAVs have come down. But the last six month’s or one year’s returns are pretty decent. In fact, we are in a period where the trailing returns are looking extremely good for all equity strategies. So, people who stay the course do not have much to worry about because the trajectory is good. The equities have the potential of giving better than the bond yields but one should not expect the kind of supernormal returns that we saw in the last couple of years.
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