Aviation is a tough sector with no pricing power all over the world and subject to whim of oil prices, Kunj Bansal, Partner & CIO at Acepro (Sarthi) Advisors Pvt Ltd, tells ET Now.
Edited excerpts:
The Jet stock price has run up in just a whiff of a deal with the Tatas. Should one buy into this story?
Let us keep in mind that the crude prices had zoomed very recently, going up from $60 to $85. Even when crude price was $60, these companies had not been making any great money and this has been a historical problem. It is a global problem. Aviation is a tough sector with no pricing power.
Fifteen years ago, Delhi-Mumbai ticket used to cast Rs 5,000 and today it costs Rs 5,000 up and down depending on when you book and all that. The only variable is oil. It is a very good trading sector, of course. Jet has gone up on talks of Tatas looking to buy. Whether that will happen or not I do not know but these are traders’ delight stocks and a long-term investor has never made money on the aviation stocks.
Everyone is now suddenly bullish on ICICI Bank and corporate banks. Is the trade getting crowded or does it have a long way to go?
The trade has just started and there is a long way to go. To extend my point further, when it went down till 10,000 in October end and since then, probably only the Nifty, Sensex or the largecap stocks have recovered and even gone up to 52-week highs.
The underperformance was long, almost three years. Led by multiple developments; first the market, then financials of the companies, NPA asset quality issues and then the management issues. All those are behind now.
In valuation terms, compared to big names like
HDFC Bank or Kotak Bank, this stock is still cheap. In the short term, because it has moved up very sharply and may come down, it is the traders’ call but for medium to long- term investors, it still can give good returns.