homemarket Newsstocks NewsPE funds buying into companies is a big theme, says Nepean Capital's Gautam Trivedi
PE funds buying into companies is a big theme, says Nepean Capital's Gautam Trivedi
Private equity funds buying a stake in companies is a big theme for this year, particularly in the midcap space, Nepean Capital’s co-founder and managing partner Gautam Trivedi told CNBC-TV18 on Thursday.
Private equity funds buying a stake in companies is a big theme for this year, particularly in the midcap space, Nepean Capital’s co-founder and managing partner Gautam Trivedi told CNBC-TV18 on Thursday. Speaking on emerging trends in the market, Trivedi said that contract manufacturers like Dixon Tech, Amber Enterprises, chemicals, midcap pharma are generating huge interest.
“If you look across the board, there are a bunch of themes that we see in particular there are new emerging trends. So first and foremost chemicals, midcap pharma, contract manufacturers – if you look at Dixon Technologies for example, that stock is up 3.5 times in the last 12 months, Amber Enterprises has done very well. Hindustan Foods – that is not so much contract manufacturing or electronics but it is more for FMCG which is up 100 percent,” Trivedi told CNBC-TV18.
We may see a lot of buying interest in the midcap space, Trivedi added.
“The other theme that we are seeing in terms of new trends is PE funds. You have seen four this year alone – KKR buying JB Chemicals, Blackstone buying out Essel Propack, Carlyle announced 50 plus percent stake in SeQuent Scientific and earlier this year Advent took over DFM Foods. So you are seeing a lot of that coming up as well and that will increasingly happen to midcap companies where the promoters are either multi-family and second generation wants to go their separate ways.”
Speaking on COVID-19 and lockdown impact, Trivedi said customers are just not walking into shops and this could result in massive sales downtrend in names such as VIP, Shopper’s Stop, AB Fashion.
“Companies like VIP Industries, Shopper’s Stop, Indian Hotels, Aditya Birla Fashions have been the worst hit. So even though the shops are open, the fact is customers are just not walking in. So I think that is one trend where you have seen EBITDA sales down anywhere from 85-90 percent which is unfortunate,” said Trivedi.
Yet another trend emerging is that more organised players are gaining market share from the unorganised sector, especially in the rural parts.
“The other interesting business that also got impacted by the peak season phenomenon were companies that are in the acute therapy business like Alkem or Torrent Pharma. The other trend that we have seen is the organised players gaining market share from the unorganised sector. As you talk to more companies on the conference calls, they are saying that demand is significantly coming back from rural India, tier-III, tier-IV is reaching its way back to metros,” he further mentioned.
We could see many IPOs from technology companies in the next few years, Trivedi said while sharing his views about technology companies.
“Unfortunately unlike China or the US, we have got very few listed plays in India as of now. Maybe over the next three-five years, we will see another 100 companies IPO in India. There is a very limited choice. That is also to some extent driving up the valuations of the existing listed plays because there is a very few pool of stocks to choose from.”
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