Covid or not, Sandip Sabharwal is still bullish on Inox

People will spend on entertainment, low ticket item consumption and these things will come back very rapidly, says Sandip Sabharwal, asksandipsabharwal.com at ET Now Webinar Special.

By Ayesha Faridi

Why are you betting on Inox? When you have Laxmmi Bomb, Sadak 2 and everything else releasing on OTP platforms, who needs the movie theatres anyway?
If we want to invest in this market and make money, you have to look for deep value -- companies which might not have visibility today but have the balance sheet and the market's strength to survive. Inox is virtually a duopoly in the multiplex business today with PVR. Both of them are going to have more avenues this quarter, may be more avenues next quarter. The point is that they have virtually more debt in the balance sheet. That will help them sustain, survive and move forward. The stock’s around 60% off the top and eventually it depends on what you believe will happen in 2021.

If you believe that there is eventually going to be a vaccine, then in 2021 you will get vaccinated, this disease will get controlled and things go back to normalcy. I am an advocate of normalcy. For those who are not, this stock is not for them.

But I think people will spend on entertainment, low ticket item consumption and these things will come back very rapidly. That is why you have to look at deep value in companies which will come back and are in a market position.

Whenever their businesses restart in a big way, they will regain their market share. That is why I say Inox. The market cap is just around Rs 2,000 odd crore. Last year, they did a turnover of Rs 2,000 crore. Can they go to Rs 10,000 crore within the next 10 years? Maybe yes, they could go to Rs 10,000 crore. That is the context in which we have to look at it.