6 Stocks to Bulk Buy or SIP | Akshat Shrivastava
Summary
TLDRIn this finance-focused video, Akshat Srivastav, an experienced investor and hedge fund manager, discusses investment strategies around SIP-worthy stocks, bulk buying opportunities, and stocks to avoid. He analyzes market trends, including Nifty's valuation, and provides insights on specific stocks like HDFC Bank, Hindustan Unilever, and Jio Finance, emphasizing the importance of understanding market dynamics and company fundamentals before investing.
Takeaways
- 📈 The speaker, Akshat Srivastav, discusses three key points about stocks: which to consider for systematic investment plans (SIP), which to bulk buy, and which to avoid.
- 🏦 HDFC Bank is identified as a bulk buy rather than an SIP-worthy stock due to its large market cap and slower growth potential compared to its past performance.
- 📊 The Nifty index is described as fairly valued, with no immediate signs of being overvalued or undervalued, suggesting a balanced market scenario.
- 💡 The importance of understanding the relationship between price and earnings growth is highlighted as a fundamental aspect of making informed investment decisions.
- 🚀 IDFC First Bank is presented as a potential SIP-worthy stock due to its smaller market cap and higher growth potential in comparison to larger banks.
- 🛒 Hindustan Unilever is mentioned as a bulk buying opportunity, with its P/E ratio near its average and the company's strong market position in FMCG.
- 💰 The video emphasizes the significance of macroeconomic understanding and the influence of big investors like Warren Buffett on market sentiment.
- 📊 Technical analysis is briefly touched upon, using Kotak Bank as an example of a stock that has been consolidating and presents bulk buying opportunities.
- 🏥 Max Healthcare is highlighted as a good SIP option due to the growing demand in the healthcare sector and the company's significant revenue and profit growth.
- 🚗 Jio Finance is discussed as a stock with high potential but also high volatility, suggesting a cautious approach and recommending buy-on-dips strategy.
- ⚠️ The script concludes with a word of caution about the challenges and overheated sentiment surrounding the EV market, particularly for Tata Motors, advising investors to be aware of the risks involved.
Q & A
What are the three key points discussed in Akshat Srivastav's video?
-The three key points discussed in the video are: 1) Stocks suitable for Systematic Investment Plans (SIPs), 2) Stocks that can be considered for bulk buying, and 3) Stocks that should be avoided.
What does SIP mean in the context of stock investments?
-SIP, in the context of stock investments, refers to a systematic approach where an investor regularly invests a fixed amount of money into specific stocks, often with the aim of long-term growth.
What is Akshat Srivastav's educational background and current occupation?
-Akshat Srivastav graduated from INSEAD Business School and has been managing a portfolio for approximately 10 years. He currently runs his own hedge fund and shares his investment knowledge through courses and his YouTube community.
What is Akshat's view on the current valuation of the Nifty 50 index?
-Akshat believes that the Nifty 50 index is fairly valued at the time of the video. It is neither overvalued nor undervalued based on its price-to-earnings (PE) ratio and market conditions.
Why does Akshat suggest HDFC Bank is not a suitable stock for SIP but a good bulk buy?
-Akshat suggests HDFC Bank is not suitable for SIP because it has already reached a large market cap and may not experience the same growth as it did in earlier years. However, it is a good bulk buy due to its current PE ratio and potential for PE expansion.
What is the difference between a SIP-worthy stock and a bulk buy stock according to Akshat?
-A SIP-worthy stock is one that is expected to grow significantly over time and is suitable for regular, systematic investments. A bulk buy stock, on the other hand, is one that is currently undervalued or trading at a good price, making it a candidate for a larger, one-time investment.
Why does Akshat consider IDFC First Bank as a good SIP-worthy stock?
-Akshat considers IDFC First Bank as a good SIP-worthy stock because of its smaller market cap compared to larger banks like HDFC, indicating a higher potential for growth. Additionally, the banking industry in India has been growing rapidly, suggesting a positive outlook for smaller banks like IDFC First Bank.
What are some factors that make a stock a good bulk buying opportunity according to Akshat?
-Factors that make a stock a good bulk buying opportunity include a stock trading at a low PE ratio, the company being well-managed with a clean track record, and the potential for the stock price to recover or grow significantly over time.
What is Akshat's perspective on investing in well-established companies like Hindustan Unilever (HUL)?
-Akshat believes that investing in well-established companies like HUL can be a good bulk buy opportunity, especially when they are trading at or near their average PE ratios. These companies are transparently managed and have a history of steady growth, making them reliable investments.
What advice does Akshat give regarding investment in the healthcare sector, specifically Max Healthcare?
-Akshat advises that investing in the healthcare sector, such as Max Healthcare, can be beneficial due to the high and growing demand for healthcare services. He mentions that Max Healthcare has shown significant growth in revenues and profits and is likely to continue as the healthcare market consolidates and urbanization increases.
What is Akshat's view on the potential of Jio Finance as an investment?
-Akshat views Jio Finance as a stock with high potential but also high volatility. He suggests that it is not suitable for bulk buying at its current stage due to its high PE ratio and the need for significant earnings growth to justify its market cap. Instead, he recommends a buy-on-dips strategy or a long-term SIP approach with caution.
What are the challenges Akshat identifies for the electric vehicle (EV) industry in India?
-Akshat identifies several challenges for the EV industry in India, including the high cost of land for infrastructure creation, the need for a widespread network of EV charging stations, and the intense competition within the EV market, particularly from Chinese manufacturers.
How does Akshat approach the analysis of a stock's potential for growth and investment?
-Akshat approaches stock analysis by considering factors such as the company's market cap, PE ratio, industry growth potential, the company's historical performance, and macroeconomic trends. He emphasizes the importance of understanding the business model, having confidence in the investment, and considering both the risks and potential rewards.
Outlines
😀 Introduction and Overview
Akshat Srivastav introduces the video, outlining three main points: stocks suitable for SIP (Systematic Investment Plan), stocks to bulk buy, and stocks to avoid. He emphasizes that the video is educational, not a recommendation, and shares his credentials and experience in finance and macro investing.
📊 Nifty Levels and Market Sentiment
Akshat discusses the current Nifty levels, explaining that the market has been consolidating for two years and is fairly valued. He addresses the market sentiment influenced by notable investors like Warren Buffett and Michael Burry and stresses the importance of understanding the fundamentals over reacting to market rumors.
📈 SIP-worthy Stocks: HDFC Bank
Akshat elaborates on the concept of SIP, using HDFC Bank as an example. He explains why HDFC Bank was a good SIP stock in its growth phase but not currently, due to its large market cap and mature growth rate. He suggests it as a bulk buy stock instead, highlighting its potential for PE expansion.
💼 Banking Sector and SIP Stocks
The discussion continues on SIP-worthy stocks, contrasting HDFC Bank with IDFC First Bank. Akshat points out the growth potential of smaller banks like IDFC First Bank compared to larger, more established banks like HDFC, which he recommends for bulk buying.
🏥 Healthcare Sector and SIP Stocks
Akshat highlights Max Healthcare as a good SIP stock due to its significant growth in revenues and profits. He explains the sustainability of its business model amidst increasing healthcare inflation and urbanization, which drives demand for organized healthcare services.
💹 Jio Finance and Investment Strategy
Akshat discusses Jio Finance, its market cap, and its potential for growth. He explains the importance of operational income for justifying its high PE ratio and recommends it as a buy-on-dips stock due to expected volatility. He cautions against bulk buying at its current high valuations.
🚗 Tata Motors and EV Market Challenges
The video concludes with a discussion on Tata Motors and the challenges of the EV market. Akshat explains the infrastructure issues in India and the competitive nature of the global EV market. He advises caution with Tata Motors, emphasizing the stock's overheated status and limited upside potential.
Mindmap
Keywords
💡SIP (Systematic Investment Plan)
💡Bulk Buy
💡Nifty
💡Macro Investor
💡PE Ratio (Price-to-Earnings Ratio)
💡Market Cap (Market Capitalization)
💡CAGR (Compound Annual Growth Rate)
💡FMCG (Fast-Moving Consumer Goods)
💡Technical Analysis
💡Margin of Safety
💡EV (Electric Vehicle)
Highlights
Discussion on three key investment strategies: SIP-worthy stocks, bulk buying stocks, and stocks to avoid.
Introduction of the speaker, Akshat Srivastav, with a background in finance and experience in managing a portfolio and running a hedge fund.
Emphasis on understanding the logic behind investment decisions rather than just following recommendations.
Analysis of the Nifty levels and its current valuation state, described as fairly valued.
Contextualization of Warren Buffett's cash position and market impact, advising against overreaction to big investor moves.
Explanation of the difference between price and earnings growth, and the importance of this distinction for investors.
Case study of HDFC Bank as an example of a stock suitable for bulk buying rather than SIP due to its growth phase and market cap.
Discussion on the potential for PE ratio expansion as a driver for stock price increases even without earnings growth.
Introduction of IDFC First Bank as a potential SIP-worthy stock due to its smaller market cap and growth potential.
Analysis of the FMCG sector, specifically Hindustan Unilever, as a bulk buying opportunity based on its P/E ratio and market position.
Technical analysis of stock patterns and resistance/support lines as a method for identifying bulk buying opportunities.
Importance of investing in fundamentally strong companies with good management and clean operations.
Discussion on the healthcare industry's growth and Max Healthcare as a SIP-worthy stock due to its consistent revenue and profit growth.
The impact of urbanization on the healthcare sector and the potential for organized healthcare providers to grow.
Introduction of Jio Finance as a stock with high market cap and potential, but also high volatility and risks.
Analysis of the challenges and opportunities in the EV market for companies like Tata Motors, highlighting the need for caution.
Advice on investment strategies, emphasizing the importance of understanding the business and having confidence in the investments.
Transcripts
. Hi everyone. Welcome to today's video. On today's video, I'm going to discuss
three things. Number one, that which stocks you can possibly SIP. Sip means that, for example,
if you're getting your salary and if you are looking to put that money into the market,
then regularly which stocks you could possibly consider buying. So this is one. Second key point,
that which stocks you could bulk buy.. Which stocks would these be and why? Third and finally,
which stocks you should avoid. This third part is not a big part. So I'm going to speak about
all these three parts on today's video. For people who are new to my channel, my
name is Akshat Srivastav. I graduated from insead` business school. I learned a lot of finance. Now,
approximately for the last 10 years now, I've been managing a fairly decent size portfolio. Now,
I run my own hedge fund. I travel across the world. I understand investing through different,
different lenses. I study the macroeconomics. So I'm a macro investor. I share all these
learnings through my courses, through my YouTube member community. I try to educate
people fundamentally, and that is what the goal of this video will be as well.
So this is not a recommendation video. I will help you understand the logic behind things. So
if you like it, do consider number one, liking this video, and number two, subscribing to the
channel. It's okay. So let's begin. And the first and foremost thing that you need to
understand is the Nifty levels because Nifty is overvalued, undervalued, this, that stuff. See,
guys, basically, Nifty is here and it has been consolidating in this range since when? For
the last two years, the Nifty PE ratio has been almost in this same zone. For the last two years,
even now, Nifty has been consolidating. It is neither overvalued, this is neither undervalued.
According to me, this is fairly valued right now. Now, of course, going forward in the future,
panic create. For example, right now, a lot of talk is happening that Mr. Warren Buffett
is sitting on massive amount of cash. He has liquidated some of his position on Apple stock.
So crash. No. So Mr. Warren Buffett had liquidated his positions even after 2020. And then he was
sitting on cash for approximately one, one and a half years. He missed a major market rally.
I'm not saying that he's a bad investor or something. Please don't start all that
fight. I'm just helping you understand the entire context. And every day, some big ticket investor,
for example, Mr. Michael Burry, he constantly says negative things about the market.. See,
guys, you have to be reasonable. The point and a more practical perspective is that
if you are a big ticket investor, let's say that if you have 100 crores in the market,
even when you are trying to convert more into cash positions, you will not
cut more than 20% of your positions. Now, typically speaking. Now, on top of that,
if every year this big investor is making 10 crores, they will just put it under the
mattress and go to sleep. No. Inflation, they still keep on investing in a sensible manner.
So which brings us to point number two. But let me close point number one. That's see,
right now, the market is neither undervalued, neither overvalued. You don't need to be hyper
scared. You don't need to be overjoyed. That is the price component. But check it in context of
earnings. If earnings are going up and therefore the price is going up, there is no issue.
But if the price is going up and the earnings are going down in the market, that's a problem.
So knowing these fundamental points is what is going to give you confidence. I hope that this
first point is clear. Now let's move on to second key point. That okay, what are some SIP-worthy
stocks? And can you give some commentary? Yes. So I'll I'll take a quick here. So let's start with a
simple story. And let's talk about HDFC Bank. See, I'm not SIP-ing in HDFC Bank first and foremost,
and I'll quickly explain you the logic behind it. See, the best time to SIP something like HDFC Bank
was somewhere here when it was in a growth phase.. They got crushed very badly, all that stuff. And
after that, there was a massive recovery. So for example, if you would have purchased or did SIP
on something like HDFC Bank, it was a smaller bank to begin with. And then if you would have
continued to hold it in the entire bull run, it almost like, how much money did it make for
you? It almost ten-egged your money. So again, I will just mark this region down somewhere here.
Here you purchased and you continued to invest it here.. But it's not as if you can buy it at the
absolute bottom and sell it at the absolute top. Basically, the idea is that you keep on putting
money on a systematic basis. And instead of 12Xing your wealth, this would probably 4X, 5X your
wealth, which is very good. Now, what you need to understand here is very simple. That's see,
back in 2008, 2009, HDFC had a smaller market cap. But market cap would have been very less.
It would have been a fraction of what it is right now. So this bank could almost 2X, 4X in size. So
this was possible back then. Number two, there was some good stuff was there. And basically,
a lot of good things was happening in the banking industry, especially private banks in India. And
the growth rate of this industry was fairly high. The banking growth rate has been very
high in India in the last one and a half. This was overall a growth stock. So the SIP that is usually
done on a growth asset. Now tell me that, hey, how much will HDFC Bank grow in market cap by?
I'm not saying that it will not grow. It will definitely grow. It might double in size,
but that might happen due to PE expansion, not necessarily due to earnings doubling and all
that stuff. A cheap performance a bank, you can expect, let's say, a 15% CAGR growth on the bank,
but it's not as if that it's a very small bank and it will keep on doubling every four or five years,
all that stuff. Therefore, it is not an SIP stock as per my understanding. Now,
it is a bulk buy stock. Now, what is the meaning of bulk buy?. So there is likely to be a P/e is
what? Pe is around maybe 16, 17. So there is likely to be a PE, there is a room for
improving in price. So earnings, let's say it stays constant. The PE ratio can still
go from 17 to 24 with zero growth in earnings. So therefore it is in a bulk buying zone. Why?
Because as of the money, the banking, private banking stocks are going to remain at 17 PE,
this, that stuff. Why? It has been the lowest PE since... Since when? Since since even here.
It is at less than that level. Same is the case in Kotak Bank. Same is the case in a
bunch of other private sector banks. So these are at bulk buying levels, so to say. Now,
what becomes a good SIP-worthy stock? So on the flip side, if we consider something like,
let's say IDFC First Bank.. I have repeated this because I want you guys to make money. See,
here the market cap is What was HDFC's market cap? It was 11 lakh crore. Now,
there is almost a 20x or 20 times difference between HDFC first bank market cap and HDFC
bank's market cap. So if you have to get a SIP, then where do you think growth will improve?
For example, a good phase in banking, then do you think or do you not think that IDFC first
bank will literally double in literally two years? Then HDFC bank doubling in No,
guys. Hdfc Bank is a very good bank. I have bought it in bulk. I am keeping it,
and it will grow in value. Why? Again, I keep on showing it, so I'll be very quick here. Hdfc Bank.
For example, in the last four or five years, has it been able to double its earnings net profits?
Yes, it has been. Technically, in the last four years, for example, in 2019,
what was the stock price? You have to look. 2019, the stock price was roughly 1,300. Now,
what is the stock price? It is 1,400 something, despite revenues doubling, despite profits
doubling. Under no circumstances is HDFC a bad bank, but it is not an SIP type of a thing because
this means for a fairly long period of time, it might just consolidate again. So therefore,
you need to buy these type of good stocks. For example, HDFC Bank, Kotec, when either technical
patterns are getting formed or when you see a bulk buying opportunity. Let me give you another
example of a bulk buying opportunity, which is Hindustan Unilever. So I'm. I'll just quickly
cover it and explain you the funder. Therefore, I'm repeating the examples. Now see, here again,
if you take a look at the P/e ratio, it is almost falling to its average P/E. You're not
buying this stock at crazy valuations. Problem, when you are buying HDFC Bank or Access Bank or
good companies like Hindustan Unilever, even if you go and read 20 or whatever,
annual report this, that, you will not be able to uncover any scams and all that.
These are cleanly run firms. They are in the public light. The only issue which happens in
these type of companies is that valuation goes up very high. If you are bulk buying these type of
stocks at good levels, you will make good money. That is the bottom line. Now, I'm not saying. I
don't know. It might take like six months. It might take one year for stock price recovery,
whatever it is. But right now, if we go back to FMCG space, so the volume is coming up. I
had made an entire video on HUL, go and watch it. So volume growth is happening. Profit growth when
it comes to HUL stocks, because they are able to price their products really well. In fact,
during COVID also, or just after COVID, they were able to increase their product prices
by 10 to 20% in a very natural response.. Then comes a very natural response.. See,
it really depends from stock to stock perspective. But let me still give you a very quick idea. So
let me pick the example of Cotec Bank. Again, this is at a bulk buy level, according to me.
I have already bulk bought it. Now it's your call. What do you want to do with it? This is
not a recommendation. All that stuff. See, here is where we are, technically speaking. And if I just
have to draw the pattern, this is the resistance line. Resistence is the one that touches it and So
you can see this. This is the support line. And the stock has been trading from almost 2021,
it has been almost 3.5 years, roughly 3.5 years, 0%, in fact, negative %, because
I mean, here I guess talk. So how much returns can be made? So if this technical
pattern would have sustained, so ideally this stock should have reached somewhere here. So
the gain potential from here, because stock right now is somewhere here. So
all these are bulk buying opportunities as per my understanding. Now a natural question will come,
can you write it on a stamp paper and give me that today if I invest in HDFC Bank or HUL and
all these stocks, I will make money. No, I cannot write. Why? Because you need to have logic. You
need to have confidence to invest. This is the same analysis I was giving for a stock like Meta.
Again, I will link the video here. Go and watch it.. When it started running in a year,
it ran like 150%, right? So that's how fast even big companies can run. So please do not make the
mistake of thinking that HUL cannot double in price, HDFC Bank cannot double in price
quickly. It can because those gains, they are deliberately held. They are not allowed to run
for a little bit. So that's typically how it happens. Because if it were that easy,
it doesn't work that way. Then everyone would be rich. So you need to have an understanding
of technicals. You need to have an understanding of business. You need to have faith, confidence,
and you need to know the stuff that you are betting on. I teach all this on my investment
course. In case you guys are interested, it's four-day intensively taught course.
You guys can check out. The next batch is about to start, so you guys can check the links in the
description and comment box. My batches fill out very quickly. The reviews are excellent
for these courses. I will play some reviews for you. You guys can go and check it out yourself.
In case you're someone who is investing more than 4-5 lakh, a year, then these are ROI-positive
courses. Roi means, for example, if I'm able to help you make additional 1, 1.5, 2% return,
minimum, so you will get a lot of money from the course. So please consider it from that
lens. This is not a push that you buy my course or something like this. All I'm saying is that
everything is practically, fundamentally Why? Because I myself show my PnL. Because every year
I reveal it. So I'm an industry practitioner. I actually put my own money on the line. I put my
funds money on the line. I get those learnings and I share it with my students. It's okay. So
now let's continue with the I had a talk of SIP-worthy stocks now. You have said,
what are some SIP-worthy stocks? So IDFC first, which is a very good SIP-worthy
stock. Number two, what you can do is, let's see, you might now think about,.
Because then what will happen is that they might not double. This is what you told us. No,
you need to understand the context. So I'm going to give you a Max health care case.
And this is a stock that I'd purchased roughly 6-8 months back. I had also
explained the rationale of buying it on my member community. And in the last one year,
this stock has given rocket returns. So this has made very good money. And what was
happening was that the healthcare industry, a lot of money was coming in. For example,
last year, insurance became really expensive. I used to say it out very loudly,. Healthcare
inflation itself is 12, 14%. Now, what is the meaning of healthcare inflation being 12,
14%? It means that if the general inflation in the economy, that is 6, 7%, healthcare products,
that inflation is double.. Now, earlier, you used to pay like 1,000, now, because it is growing at
12%, in five years, the cost of health care will double, and it will keep on doubling if
inflation keeps going up at roughly 12%. So that is how fast the inflation is growing. Now, the
problem that ends up happening is that basically, if you look at the market cap of Max Health, now,
this is like 81,000 crore company. This is not a small cap, mid cap type of a company.
This is a reasonably sized player in the market. Now, if you look at this, you will know that it
doubling its revenues, profits. The short answer is, in fact, in the last three years,
it has almost four times. It has increased its revenues. Almost how many times? Almost
20 times. It has increased its profits. Now, a natural question is, is this thing cyclical?
Maybe COVID over it, people started spending a lot more money on health care, and now they will not
spend. No, so this is not like vaccine business. I mean, Max health care is into hospitals. For
example,. So you'll say that it is engaged in providing health care services through primary
care clinics, multispeciality hospitals. So your hospital business. Now this is highly sustainable.
Now you need to ask yourself,. It has almost increased by four times in the last three years.
Almost every year, double. Why is this happening? Now think about it that Up until very recently,
especially like pre-COVID, there was a lot of prevalence of very small hospitals. These are,
in fact, compounders used to become doctors. In fact, if you go to tier 2, tier 3 cities,
villages, compounders act like doctors there.
. So this was unorganized health care, one could say. Now, much of that health care is
getting converted into organized space. This is one. Second key point is a lot of migration to
urban localities have happened. For example, just say, the big chain of hospitals is not
there in Goa. They're a handful. But in Delhi, there are almost every major hospital is there..
From there, they will make a lot of money. So as cities get more urbanized, pollution problem,
duniavargi problems, by default, people have no other choice but to avail treatments at these
type of hospitals only. So this trend is likely to stay. The only reason why this trend will fall off
is if de-urbanization problem happens in India, if satellite city starts to come up, then expansion
and all that stuff, and their per hospital profit will come down. So expanding that franchise,
so to say, it is already stable for something like Max, Apollo, all these stuff, and they are going
to be consistent compounders from this point. It's unlikely that they don't have a business
of 10,000 crores by the next 2, 3 years. So this stock is also likely to double.
So you could possibly put money in an SIP mode. Now, I will make a detailed
post tomorrow on the member community. Again, you guys can check the links in
the description and comment box to join it. I give more detailed in-depth macro commentary,
but I will introduce you to a couple of more stocks here. So one stock, which is Jio finance.
I am also an investor, by the way. I had made very good money on JIO finance already. Again,
I had made all the announcements in the member community. Now, JIO finance should be bulk buy,
should be SIP. See, I'm not doing either. Now, in my case, the situation is that I
have already put a big chunk of money in JIO finance to begin with. I have a relative margin
of safety. Here are three, four key points that you should know about Jio Finance. Now,
one is the market cap point. See, the market cap of the company is already 2.25 Lakh crore.
That is how big JIO finance has already become. Right now, their revenue from operation is close
to nothing. Why? Because their businesses are not established yet. Most of the money
that they are making is from their cash flow from investing and cash flow from financing.
Now, what does this mean? All that stuff, you Basically, going forward,
what is going to happen is that the onus of proving this market cap on Jio finance has to
be borne by OpEx income. So operational income Basically, now, if you break apart the model,
what you will see is, and this was an interesting point here. So for example, here you will see,
and I will highlight this section. This section is very important. The Jio FIn is a holding company
of what? Of insurance, broking, JIO payments bank, JIO payment solution, reliance industry,
etc. And your broking business may be, AMC business may be, etc. Now, AMC business,
business, business, business, business. The first phase of growth of JIO finance was a sentimental
push because everyone was almost certain JIO finance regulation to handle. And it has. It's a
2.25 Lakh crore. It's almost three times that of max health care. Now this is digestible,
one could say. As per your understanding, everyone would have their own perspective.
My simple point is that if JIO finance is 50% market cap of HDFC Bank,
I will not worry because HDFC Bank to get to that point of market cap.
JIO finance has a lot of connections. It already has a lot of regulatory clearances,
and brand building, whatnot. So 50% of the market cap is not an issue. I'm giving you approximation.
I'm not going to give you a business model, how will I analyze it? So I'm giving you
approximation. I'm giving you approximation. I'm giving you approximation.. After that, what
is going to happen is that see, this PE has to be justified. Right now, this PE is at 140. Now, just
for context, if you look at Angel One's PE, etc. Their PE must be around like 21, 25,. So in order
for the stock not to crash and all that stuff, earnings have to improve quite aggressively. And
what type of earnings? Well, this has to be cash flow from operations. This cannot be cash flow
from investing or cash flow from financing. Now, this will be tested. So this has to to justify
the market cap of the company, because it's my PE and all that stuff. So this stock is going to have
a lot of volatility. So this is the bottom line. So for me, this is a buy on dips type of a stock.
This is not a bulk buy anymore, because if I just quickly comment on the stock price,
the stock price in the last one odd year, it has gone from 242 all the way till 380. So almost
like 80, 90% run up. Many people have played around with the sentiment of the stock. This
is. They are expanding everywhere. They have a partnership with BlackRock, etc. So of course,
the earning is going to go up, no doubt about that. The only issue that remains to be seen
is at what rate are they able to double the earnings at every two to years? That remains to
be seen because that is what the expectation of the market is from a JIO finance stock.
This is a very good buy on dips type of a stock. This is a type of stock where you have to do
margin of safety investing. Now, what exactly is that? I will write a note next week on my member
community. But basically, if you are buying it at absolute crazy prices, I will go and buy it. No,
you will go on these type of stocks. Don't do that. They will exhibit a lot of volatility.
Now, you might be something that, you know what, boss, I'm going to do SIP on JIO finance. Then
it depends on the duration of that SIP. For example, if you're of the viewpoint, I'm going
to hold this stock for anyways 10 years.. You keep on doing SIP, most likely it is likely
to go up only. That should not be a problem. But. The final point, we have already run out of time,
I think, but I will still give very high, given the very high PE of the stock, that you need to
be a little bit cautious. Do not bulk buy at this stage. That is what I would say. But then that is
my So number one, if you take a look at the stock run-up. So stock run-up has happened from Rs.180
all the way till ₱963. So almost seven, eight times it has happened in the last four years.
Now, the reason is what? Now, the reason is that everyone kept on saying, EV growth,
Tata Motors, up has gone. Now, almost 70% of the money that Tata Motors make is from
its Jaguar Landrover business. It is not necessarily an EV play.
I think they I see EV cars, therefore, Tata Motors will as a price. Now this is dangerous because
of that. So this is point one. But the sentiment says, I see EV cars, therefore, Tata Motors will
as a lot of challenges. For example, and you are a lot confused, so I'm just going to keep
it at a very high level. I might make a separate video on this topic, but I will just state two,
three points very, very bluntly and feel free to disagree. No problem there. But please keep the
discussion reasonable and don't confuse people who are just reading it and they are newcomers,
all that. So number one problem is the four-wheeler infrastructure creation issues.
For example, China, when EV charging points are going to be, infrastructure layout, US, this is
driven by data. You have to plant those EV stations and EV charging stations,
all that stuff. Now, India announced. For example,
you can possibly drive like 350 km or something like this on a full tank. So long distance. So
petrol pump, you have to make it an EV charging station. They were not built on any study per se.
They crop up because when it comes to conventional automobiles, the range is fairly wrong. For
example, you have a petrol, then you can. If you actually say, we will convert it to EV charging
points, all that stuff, might not be suitable. That's point one. Point two, you might say,
maybe we'll bring new infrastructure in. Do you know the cost of land at a highway in India? It's
one of the most expensive in the world. Why? Because India has a very densely populated,
concentrated It's not that easy. So all these challenges are there in terms of infrastructure
creation. It has got nothing to do with the fact that we cannot create good EV infrastructure.
We can, but there are legitimate problems in India because our densely populated landmass.
America is almost three, four times India's landmass. China is very big in terms of land area,
all that stuff. So building that infrastructure is easier there compared to building that in
India. So this is a major problem. Number two point is that in the EV segment,
it is a net loser industry. For example, it's not as if 10 million vehicles are sold in the world.
These are conventional. Now 50 million EV vehicles will be sold in the world because it's EV. No, the
market size will remain the same only, whether you drive conventional automobiles or EV automobiles.
But the problem is that in this. You don't know about the market prospects in the
future, that who is going to come in, etc. Until now, Tesla is going to be the number one player.
Even Elon Musk himself is saying, you know what? That Chinese is what I'm going to be
scared of, because they will be able to manage the competition, and the cost of production is lower,
etc. Etc. Et cetera. So a lot of competition is coming into this mix. So please be a little
bit cautious. I'm not saying not to buy it or something like this or sell it or
something like this. This is your call. All I'm simply telling you is that this is a slightly
overheated stock as per my understanding. The upside is very less compared to the downside.
So that's what I would close the conversation at. I hope that you enjoyed this video. If you did,
do press the like button and subscribe to this channel, and I'll see you soon.
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