Siddhartha Khemka’s 6 bets to play the festive theme

“PVR and Inox are taking approvals for mergers and their positioning will be pretty strong in case of any new competition that may come up via a new multiplex line from Ajay Devgn,” says Siddhartha Khemka, Head of Retail Research, MOSL.

Do multiplexes fit into the criteria of consumption uptick because the sector is facing its own headwinds? Brahamastra has done better than expectations but then there is the competition from OTT. Plus, Ajay Devgn is coming up with his own multiplex line as well. What is your take on that industry?
Multiplexes fit into the consumption theme but here the challenge is that some of these stock prices had moved up sharply post the unlock theme that played out. At certain valuations, plus given the newer challenges from the OTT platforms, people are talking about boycotting Bollywood, all that is impacting the collections. One needs to stay a little cautious at the current levels. If there is a sharp correction, the overall multiplex theme in India is definitely worth participating.

Indians like going out to watch movies in theatres. It is just a matter of time before things settle down. New players would keep coming in but the bigger threat is from the OTT platform rather than another new player, entrant as we are seeing that consolidation has already happened and two of the larger players; PVR and Inox now talking about a merger. They are taking approvals and their positioning will be pretty strong in case of any new competition.

What is the outlook on the entire festive theme in terms of consumer durables or retail names? Would you bet on a bumper festive demand?
That is a theme worth looking at. The festive season has started really strongly, we have seen the management commentaries talking about strong pent-up demand, not only for the autos which we see through the record bookings of new launches but even for consumer durables.

Some of the retail companies have been reporting very strong numbers and especially the QSR companies. Our preferred play for the festive season would be a) through the retail where we like the Trent and ABFRL; b) through the QSR where we like Jubilant Food Work, Devyani International and finally the hotels.

That is a segment which has picked up in terms of the cycle after almost eight, 10 years and the demand is far outpacing because of the consolidation seen in the industry. Supply has been pretty constant but the demand has improved leading to higher occupancy, higher ARRs and better profitability. Among hotels, we like Indian Hotels and Lemon Tree.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)