Telecom a big consumption play but not a space to buy & forget, says Abbakkus Asset Management's Singhania

We have seen a few path breaking announcements made and the hope is that between now and February 1, when we have the union budget, more such reforms or announcements might be in works, he said in an interview with CNBC-TV18.

Moreover, liquidity is available in the system that is the general financial liquidity and not equity liquidity, he said, adding that the problem is that the confidence and faith of the financial system in the overall economy is low and therefore the whole liquidity right now is just being lying in bank balances with RBI. However, that is a matter of time, as and when confidence reignites, that liquidity will start to see in the system, which might then lead to the economy starting to do well, he said.

When asked to give general advice as an investor, Singhania said, “We all make mistakes and there is no harm in doing that the only one big advice would be don’t repeat those mistakes because mistakes are very expensive. Don’t get carried away with what has happened over the last 1-2 years both in terms of bull market as well as bear market.”

“The biggest mistake we make is that we start to extrapolate what has happened over the last 2 years is going to happen in the next 2 years,” he mentioned. For him, the big mistake was getting out too early from Bajaj Finance and Eicher Motors, when he was in Reliance, he said.

Talking sector specific he said, “Telecom is a biggest consumption play, but it is a sector which is prone to massive technological change and investment. So, I would not say that it’s a play that you buy and forget for 10 years because technological evolution are going to be massive but it’s a great consumption play.” Ultimately, it is all about buying stocks which can give you profits, he added.

Singhania further said, “I am not sure of buying a passenger vehicle company at 30x PE.”

Talking about their funds, he said “We have a fund which is ongoing, there we have a concept called 15-15-15. My view is that its time now to go back to deep value buying. So, we are looking at companies where there is more than 15 percent return on equity (RoE). Companies which are generating returns, which are more than the cost of capital so they will not default, where there is around 15 percent growth but they are less than 15 PE,” he further added.