Raamdeo Agrawal, Chairman and Co-Founder of Motilal Oswal Financial Services, is optimistic about the growth of the e-commerce segment and the BFSI sector. However, he is cautious about the rising valuations of companies like the Tata Group’s Trent.
On Zomato
Agrawal remains optimistic about the e-commerce sector, particularly Zomato, despite the recent profit booking at a fund level. In an interaction with CNBC-TV18, he said that while positions were accumulated at sub-₹100 levels and significantly trimmed as the stock surged beyond ₹200, his outlook for the industry stays buoyant.
He believes that Zomato’s potential, especially in quick commerce, is far from fully realised. “Best is yet to come again in this particular segment,” he said.
Earlier, brokerage firm UBS increased its price target of the food aggregator and delivery company to ₹320 from ₹260. Zomato’s quick commerce unit Blinkit ‘s Gross Merchandise Value (GMV) hit an all-time high on Sunday, a day ahead of the festival of Raksha Bandhan. The number of orders was also at an all-time high.
The shares of Zomato scaled a 52-week high of ₹280.9 apiece on Monday. The stock has climbed more than 71% in the past six months, and over 117% in 2024 so far.
On Trent
“Businesses are very exciting. What they are doing, what they are achieving, that is very exciting,” said Agarwal. However, he expressed caution over its valuation, noting that the rapid price rise is becoming difficult to justify, even for a bullish investor like him.
He drew parallels with other high-demand stocks Ola Electric, suggesting that while the company’s growth is predictable and the demand is robust, the prices may be running ahead of the underlying value.
“So I would think that prices, even in Trent, has reached a level which is very difficult to understand, but there is a momentum in the company’s performance as well as in the price,” Agarwal said.
The Tata Group company, operator of the Westside and Zudio outlets across the country, posted a net profit of ₹391.2 crore, up from ₹166.7 crore in the year-ago period. The company’s June quarter results were ahead of estimates on most other parameters. Trent will also be included in the Nifty Next 50 index with effect from September 29.
Trent might be impacted by the ongoing turmoil in Bangladesh. The neighbouring country ranks as one of the most important for sourcing for the Tata Group company alongside Hong Kong and Thailand. However, the quantum of sourcing done from the country is not disclosed.
The shares of Trent scaled a 52-week high of ₹6,750 apiece on Monday. The stock has climbed more than 66% in the past six months, and close to 124% in 2024 so far. With a market capitalisation of over ₹2.39 lakh crore, Trent is among the top 50 companies in the country.
On Private Banks, Capital Markets, and Insurance
Agrawal remains upbeat about the BFSI sector. He highlighted the growth in the capital market, citing the recent near-all-time high in Demat account additions as a sign of expanding market participation.
Agrawal believes this sector still offers significant growth at a reasonable price, with private sector banks and insurance companies well-positioned to capitalise on the ongoing financial market expansion. “I would think the banking the private sector banking and BFSI look to be good. Even insurance is looking up very well,” he said.
In July, Suresh Ganapathy, a banking analyst at Macquarie Capital Securities, told CNBC-TV18 that “private sector banks have underperformed for a long time, and now present attractive valuations with stable returns”. In June, Goldman Sachs’ Rahul Jain said, “There is more value in owning the private banks at this stage than the PSU banks”.
In a conversation with CNBC-TV18, Dean Kim, Head of Global Research Product at William O’Neil + Co, said he sees insurance companies gaining traction on the charts.
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Source : CNBCTV18