Forget Vedanta, look at rest of the metal pack: Daljeet Singh Kohli

Daljeet Singh Kohli, Head, Strategy & Research, Vasuki India Fund, says “for a retail investor, it will be a very long haul to realise any major benefit out of Vedanta’s demerger exercise. I would refrain from buying or staying in this company. On the metal pack, we are very positive. We already hold three companies in the metals pack and we think that there are probably much better options available in the metal pack and one should look at that.”


PSU banks continue to buck the trend and do quite well for themselves in an otherwise weak market. Which are the names which still might have some steam left?
We are very positive on PSU banks. We hold some of them in our portfolio. I cannot take names because of the compliance reasons but suffice to say that we have almost four or five of them in our portfolio. They are all well-known names. Because of these PSU banks, actually the portfolio is tilted towards largecaps now though our mandate is mostly on the mid and smallcaps. We believe that the asset quality which these banks have been maintaining continues to remain robust. This quarter’s number should also show that. Plus there is growth.

So system-wise growth is there and the asset quality is maintained. Both these things will help them in maintaining their valuation. Some of these banks are trading at lower than their historical averages. Which means again their valuation comfort is there. So net-net PSU banks, we remain constructive on that.

Have you looked at some of the latest IPO issuances that have come in? Do you see the value available on the table because the likes of JSW Infrastructure have seen quite a good response even in terms of subscription and now listing gains of over 30%?
Yes, it is probably because after a very long time, we have seen an issue coming from that major group and also it is in the area which is of interest to almost everybody right now. Infrastructure, ports, we know that major growth is planned for the ports and this kind of area.

Obviously there is a lot of interest for this sector and for the group also that is why it has seen such a good response. We have not taken it in our portfolio as of now. We tend to wait for an IPO for a few months to let it stabilise because during the initial days, you would normally find that there are some anchor investors and there are some other reasons for the stock to perform. Then over a period of time, all those things where that noise gets settled out that time we take a call because we are taking a call for three years.

We are not there for three-six months and therefore it is better to wait for the company to perform for one or two quarters and let this froth from these new investors go out then you take a call. So as a policy, we do not invest immediately in an IPO.

What is your take on Vedanta, given the kind of incessant restructuring that we have seen at the group level. What are you making of this demerger?
First a disclosure, we do not own this stock and we normally do not talk about the stock specifics but because we do not own it, there is no harm talking about it. For me, it is more like a debt management exercise less of any value unlocking or what they are talking about. We have seen the same exercise done in an opposite manner a few years back when they merged all of these companies into one and that time also the rationale was this only that it will create more value and after six-seven years, they are doing exactly opposite of that.

I think it is mainly to manage their debt which is purely out of whack now. They are trying to do some things in order to specify maybe the bankers, maybe the institutions and something of that kind. In any case it will take 12 to 15 months and require a lot of permissions from various stakeholders. That means for a retail investor, it will be a very long haul when you realise any major benefit out of this exercise. I would refrain from buying or staying in this company. On the metal pack, we are very positive. We already hold three companies in the metals pack and we think that there are probably much better options available in the metal pack and one should look at that.