Expect '2020' to be a stock-pickers delight; like small private banks, says Enam Holdings’ Sridhar Sivaram

He said the house is upbeat on the telecom sector. In a competitive environment it is better to be a consumer than investor. Looking at the broad numbers for the industry, he said, "Two and half years back the peak revenue was Rs 2 lakh crore, which is currently at Rs 1.5 lakh crore. The minutes of usage is more than 50 percent from what it was two and a half years back, data usage is 10 times more. So, even if you assume that if we go back to where we were two and a half years back, that is Rs 50,000 crore more EBITDA for the industry. So, if you look at the overall numbers, it doesn’t look like a big problem to me right now. We remain positive on the sector right now,” he said.

With regards to the auto sector, he said, “I did a three-day road trip in Punjab, meeting a lot of auto-dealers, cement-dealers. Clearly there are greenshoots at every level. We couldn’t find a negative news on the road. Because we have BS-VI transition coming, dealers didn’t want to stock and the companies are also not wanting to produce more right now. My belief is that we would have seen a strong recovery had BS-VI not been in the pipeline. We feel that there is a bottom in place, we have some technical issues, which have to be sorted out.

When asked about themes they would look at going forward, he said the first biggest theme is midcap private sector banks which have some tinge of retail lending attached to it. Second is auto ancillaries because once the BS-VI noise is over, some of these auto ancillaries would start to play. The demand is there but the companies are not wanting to produce, he said.

In terms of housing finance companies (HFCs), he mentioned, “I don’t like HFCs because I don’t like the business model where 30-35 percent is lent to builders and to loan against property (LAP) and only about 60-70 percent is mortgaged but the collateral damage has been to the non-banking financial companies (NBFCs). So it is an HFC crisis but NBFCs are bearing the brunt. Some of them have good business models where they are lending to niche segments and they will thrive. The ones who will survive this crisis will come back very strong. We do like NBFCs as a sector but not HFCs.”