Tata Motors a structural story; RIL a strong bet: Deven R Choksey

“Reliance Industries definitely remains a very strong company from an investment point of view. This company has more to do with the technology play hereafter in driving the business and creating the valuations for investors,” says Deven R Choksey, MD, KR Choksey Investment Managers.

Tata Motors had a phenomenal run in 2021. What is your call on this?
Strategically the growth that they have planned particularly in the passenger vehicles is an absolute turnaround story as far as the business outlook of Tata Motors is concerned. They have not only taken care of the front end distribution part by systematically moving into those pockets, they have also systematically created a very strong product portfolio by creating a smart engineering piece into the backend.

So from that perspective, the quality of the product and their appeal to the customers are far superior than they were ever before as far as Tata Motors is concerned. The strategy to put the electric vehicles into a separate company and drive electric vehicles to a start-up kind of a mindset is a welcome strategy. This is something which we would probably always look up to from the western world to learn from. The company has implemented that part of it.

Along with that, it is a matter of time before the commercial vehicle segment sees a larger growth.The infrastructure spending by the government into different projects is going to have significantly larger demand for the commercial vehicles. At the same time, larger connectivity of industry with the infrastructure – roads, railways, ports, airports – is going to demand a faster movement of goods and cargo so from that point of view too, the CV demand is going to be smarter.

And last but not the least, the scrappage policy is likely to start giving a positive impact to commercial vehicle manufacturers like Tata Motors and Ashok Leyland going forward. So all in all, I believe that the company is in a better position.

I do not look at the company from one quarter point of view, but strategically I believe it is a structural story for the next two to three years or maybe five years, as far as the outlook is concerned.

Would you be buying a Minda or a Sona Comstar even though these stocks have given almost triple digit returns in the last one year?
Yes. Minda Industries is an auto ancillary. As far as I understand, every customer that they work with, try and increase the kit value and most of the product ranges – be it the lighting division, be it in the alloy wheel division, be it in the seating divisions or horns – have the typical approach of increasing the kit value for customers. This company definitely is very well positioned from the point of view of becoming a full-fledged ancillary company and electric vehicles is something which most of the companies have systematically kept the focus on. Minda is focussed on various aspects. In the quarterly representation, they dedicate a separate page particularly for the purpose of where exactly their efforts are going in the area of electric vehicles. That gives a lot of conviction.

I like this company from an investment point of view for many years now and continue to believe that the strategy is remaining very strong as far as the growth possibility is the ancillary business is concerned. So definitely electric vehicles are only going to add further to their credentials.

Which is a better stock to own this year – Reliance Industries or Rane Enterprises?
Reliance Industries is becoming clearer to me because their consumer facing businesses of retail as well as Jio platforms have a significantly large amount of play. They are systematically integrating B2B as well as B2C kind of segments. They have created a complete Omni channel presence. From that perspective, Reliance Industries definitely remains a very strong company from an investment point of view. This company has more to do with the technology play hereafter in driving the business and creating the valuations for investors.