Zomato a good potential new age growth company to look at; liked Landmark IPO: Vinit Bolinjkar

“The brands that Landmark owns and the market which are the foreign brands have got a far bigger growth delta compared to the overall industry growth. And as India grows, the purchasing power for these aspirational vehicles is going to grow far higher and we believe that given those considerations, 20-25% growth on earnings CAGR over the next five years can be easily achieved,” says Vinit Bolinjkar, Head of Research, Ventura Securities

Of late, we have seen a lot of IPOs. Is there any name that you would want to recommend that people have missed out on the IPO allotment? Radian Cash of course is underway, Elin Electronics, KFin, Landmark, Abans, Sula Vineyards – quite a fair bit actually?
One which catches my imagination the most is Landmark. I believe that the issue was undersubscribed and you would get some good opportunity when the IPO gets listed. I believe that Landmark is a very strong business having tremendous moats and it is the only organised play in the car distribution and dealership business.

We believe that the brands that they own and the market which are the foreign brands have got a far bigger growth delta compared to the overall industry growth. And as India grows, the purchasing power for these aspirational vehicles is going to grow far higher and we believe that given those considerations, 20-25% growth on earnings CAGR over the next five years can be easily achieved.

We also believe that the company is going to get into the game of acquisitions because there are 5,000 dealerships in India; they have about 112 dealerships and consolidation is the name of the game and they have a head start being listed in the markets.

Profitability is going to be the key buzzword when it comes to a lot of these new age tech companies as the returns on the stock markets after their listing have really been a wakeup call. Could we see a turnaround in the fortune of some of these companies? How should investors approach this space?
I believe that among the new age investment companies, Zomato has been beaten down quite a bit and given that their business model is now more growth-oriented than burning cash, this is one stock which can provide decent returns for investors. Today the stock was an outlier showing 5% growth out there in intraday trade and we believe that the selling pressure in this stock is overdone. Hence we think that Zomato can be a good potential new age growth company to look at.

Should not try and play the pre-Budget rally? This time around it might not appear but one thing which we are hearing a lot about is rural recovery and that is just expected to strengthen once the Budget is out as well. What is your take with respect to rural recovery and does it mean that finally two-wheeler stocks like Hero, etc, will be back?
I am definitely in agreement that the rural recovery is well on track and the consumption space including the paints industry, two-wheeler stocks and all the consumer durable stocks are expected to do very well. Among this is one stock which we have recommended earlier, Aditya Vision. We have met the management again and our belief is that this stock can be a decent value creating story going out into the next one year.

What about its competitors like Electronics Mart? What about the entire consumer durable space because this year we have not seen much from the likes of Blue Star, Voltas, Havells and post November, the report suggests that there has been a bit of a demand slowdown. What is your take of consumer durable space as a whole?
In the consumer durable space, Aditya Vision is an outlier because the Hindi heartland is underpenetrated as far as the consumption of consumer durable is concerned and given that kind of scenario we expect this stock to outperform the entire sector and do very well going ahead.