Knowledge FAQs with Gaurav Jain (Knowledge Yagya- 05)

4 min read

Here are some questions asked by the viewers in the Yagya dated 3rd Aug 2021. These questions can provide you insights on some grounds. Please read these questions for knowledge purposes only and make any investment decisions only based on your research or the advice of your financial advisor.

Q What is the philosophy to select the stock?
Gaurav Jain:

• Currently, the market is at an all-time high and every strategy is working.
• FIIs are pulling out the money in the last few sessions. DIIs are investing money in the market. That is the reason why the market is doing well.
• Need to have the thought process about the existence of the service and product from the long-term perspective.
• Is the industry growing well? Who do the promotors work with? Need to look into financials, valuation, etc.
• So we need to always look into the 5 parameters just as we talk about FIVE-G (Financials Industry Valuation Enterprise and Governance) framework.
• It is always good to look into these 5 parameters keeping the horizon of 10+ years.

Q It is always recommended to do the investment in a staggered manner instead of lumpsum?
Gaurav Jain:

• It is always about behavior management.
• Suppose the market which is around 16,000 comes down to 14,000 in the next 6-8 Months.
• To manage the behavior it is always recommended to invest in a staggered manner in the current markets.
• Suppose if the market gets corrected and got the opportunity to buy then you can park your investment now.
• It is better to take benefit of averaging. The averaging should not be more than 1 year.

Q View on Vodafone Idea will the government take the stakes?
Gaurav Jain:

VI is currently having a customer base of 27 Cr.
VI is not doing good currently.
• Mr. Kumar Mangalam Birla is ready to give the stakes to the government or any other buyers without the expectation of money just to save the company.
• A lot of people feel that government will save this company. It is felt that the government will not be helping in saving the company. There could be a possibility if BSNL and MTNL were doing good.
• There is no option other than the private sector to protect it.

Q What is the MOAT of a pharmacy company?
Gaurav Jain:

• According to Indian Pharma major MOAT is manufacturing, regulations, and compliances which they do.
• The current MOAT is quality standards.
• R & D could be MOAT in the future.
• But Bharat Biotech has proved by creating COVAXIN. Which is completely indigenous.
• The other MOAT is also distribution.
• R & D will be outsourced to India is a very big opportunity not just in pharma but overall.

Q Best parameter to valuate pharma stock?
Gaurav Jain:

• There are some parameters to evaluate pharma stocks.
• Need to see how much is the export business, API business, formulation business.
• Also need to know the therapy area. What is the scope of therapy area in the future?

Q View on HDFC Life promoters are continuously decreasing their holding and premiums?
Gaurav Jain:

HDFC Life has a minor promoter holding.
• The Promoter-HDFC Limited is doing some kind of provisioning.
• There is no such major selling of promotors.
• In HDFC Group there is no role of promotors.
• Due to covid death, the claims have increased that is the reason why companies’ numbers are not looking good.
• They are a very good company and in a very good industry.
• In India Life Insurance, health insurance is going to do very well.
• The focus they have in the protection business, they are not in group insurance where there are low margins.
• They are also having HDFC Bank as a distributor.

Q View on holding Cipla and Sun Pharma for 5 years?
Gaurav Jain:

Cipla is a good company. Sun pharma is also a good company but is having problems related to governance and many more.
• IT and Pharma industries are more or less similar. Because both are export-oriented.
• Cipla is into respiratory therapy which is very fast-growing,
• Sun Pharma is very aggressive. Looking are governance issues should be avoided. But looking at the business there is no problem.

Q What’s the smart way to analyze Internet-based business?
Gaurav Jain:

• A smart way is to understand what they are doing just like need to understand what Zomato like a company doing in the market.
• Also need to know about the competition. How big they will be?

Q How long HDFC Bank and Kotak bank will underperform?
Gaurav Jain:

• The banking sector will be underweighted for some time due to NPAs on account of moratorium numbers.
• There will be stress in the banking sector for the next 6 months to 8 months. Will get to know about the NPAs.
• These are double engine growth in these banks.
• The financial growth sector is there and they are also taking PSU Banks sector market shareholdings.
• So there is market share growth and sector growth. That’s why the growth should happen.

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