Alchemy Cap's Hiren Ved sees significant growth potential in this segment
According to the Director and CIO of Alchemy Capital, who manages funds worth ₹7,260 crore, the organised retailing space offers significant growth opportunities to companies that can execute well.
The organised retailing space in India is still in its nascent stages and there is room for significant growth for companies that can execute well, says Hiren Ved, Director and CIO of Alchemy Capital Management.
Discussing the stellar stock performance of one such company, Trent , Ved, who manages ₹7,260 crore in funds said, "Trent has out executed everybody in the space. But I think the runway for Zudio and other formats is still significantly large, given the size and scale of our country."
At the end of 2023, Trent's portfolio included 223 Westside, 411 Zudio, and 27 stores across other lifestyle concepts .
Shares of the Tata Group retail arm have close to doubled over the past six months.
Ved noted that very few apparel retailers have really hit it big in that sweet value spot. While the low ticket consumption in India has been struggling, the value fashion segment that Trent has executed via the Zudio format, has been extremely successful.
On the flip side, Ved pointed out, retailing is an extremely focused oriented business with thin margins. This means the execution has to be top class.
Currently, there aren't too many other companies in the sector that have been able to execute as well as Trent, he said advising caution.
Ved also discussed other sectors that he is positive on.
While public sector undertakings (PSUs) have been the leaders of this bull market, he advises a selective approach now.
Brokerage firm Kotak Institutional Equities also recently advised investors to exit their PSU holdings and not get carried away with the rally in these stocks. "We would recommend investors to use the rally in PSU stocks to exit most of their positions," the note said.
Kotak believes that the government's benign policies and regulations may benefit PSU stocks in the short-term, but prevent them from addressing the large disruption threats to their business models in the medium-term.
Real estate, Ved believes, has a long way to go with intermittent bouts of correction.
Among other sectors, Ved is positive on real estate and tourism. He prefers hotels more than aviation. “Our exposure is to Indian Hotels,” he said.
For more, watch the accompanying video
(Edited by : Shweta Mungre)
First Published: Mar 11, 2024 2:45 PM IST
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