Adani stocks in a far better place than they were few months ago: Chakri Lokapriya

"The auto sector has clearly done well and as we have discussed in the past and I think they will continue to do well. The economy is still just recovering, so we are still in the early stages," says Chakri Lokapriya, CIO & MD, TCG AMC.

Let us discuss the entire auto space because four straight sessions that we have seen that sector has been in the spotlight. How have you read into the pretty much healthy auto sales numbers that have come in and do you believe that there is strong opportunity within the sector?
The auto sector has clearly done well and as we have discussed in the past and I think they will continue to do well. The economy is still just recovering, so we are still in the early stages. It is still kind of some of the pre-pandemic growth levels are still not there and some of it is still catch-up buying which is happening. A combination of all this commercial vehicle sales are likely to pick up so which means companies like Ashok Leyland, passenger vehicle now that Maruti has some semblance of EVs that looks good and in two wheelers I think TVS Motors continues to look good and M&M, of course, is a sum of parts story. So, which means the list is quite big, but they all look good.

Just wanted to understand how much confidence would it give it back in the market the fact that the Adani Group yesterday said that it has prepaid loans worth about $2.6 billion. The fact that in February it is this episode with Hindenburg that actually rattled the markets. Do you think much of the confidence and investor trust is now going to be back, in any case the stocks have seen a massive recovery from the lows?
Indeed. I mean, if you look at Adani as a group and its various companies whether it is Adani Ports or Adani Wilmar naming a few, all of these are actually kind of an annuity kind of a cash flow business if you fast forward. Ports is a very in a steady state business and Adani Ports is a growth company but once whenever the growth stabilises ports income is a very annuity kind of business. Adani Wilmar, very similar story, very strong brand, so like that so from that perspective I think they have now matched their growth aspirations, brought it down a little bit, re-accelerating their debt repayments and therefore I think the outlook now is in a far better place than when this whole episode broke out a few months ago.

Any new stocks that you may have identified or have recommended or bought already?
In the financial services space companies like Power Finance and REC both of them look good.

You were making the point on why you think PFC, REC are good investment bets?
Yes, indeed. Other than valuation, they have new avenues of growth. They are financing solar and other green types of financing as well as they are getting into infra financing in terms of fibre net and all these things are very new growth areas. Their net NPAs is only 1%. Valuations are on their side. So, I think both PFC and REC are looking good.

The big debate is whether or not these defence names have further legs to go or you think they are going to consolidate for a while and do you actually find value on the table to buy a fresh into any of these names?
These stocks have done well and I still think that they will even continue to do well and yesterday with the news of that US was open to providing some technology transfer support to Indian companies that is a huge-huge positive as and when that happens.

And as it is all these companies whether it is Hindustan Aeronautics, Bharat Electronics, all the shipyard companies they are sitting on very strong order books. So, I think the outlook is still good fundamentally even though they have done well.