What is the earnings texture of Astral actually telling you? I mean, should that be correlated to demand on the ground — urban or rural — or is it going to trickle into housing, etc.? Is there a multiplier effect that one can read through from Astral’s performance?Neeraj Dewan: Yes, what is visible from this performance is that there is definitely a slowdown. Whether this is temporary or a medium-term slowdown is difficult to say right now. But given this kind of demand outlook and the numbers they have declared, and considering that these stocks had run up so much over the last two to three years, valuations had become unsustainable. On top of that, if you declare — like we saw in PG Electroplast — weak numbers and a poor near-term outlook, you will see massive corrections in some stocks purely because valuations were really stretched. So there is a concern. Even in the housing space, there has been some consolidation and a slowdown visible. Let’s see how it plays out. Again, everyone is hoping that as we get closer to the festive season, sales will pick up. So that segment and related sectors are a wait-and-watch for the time being.
Another basket of stocks is the entire fertiliser space, and one of them in particular — RCF — is going to be in focus because their board is meeting today to discuss fundraising. So all eyes will be on that stock. But apart from that, let’s talk about the fertiliser sector as a whole. A couple of weeks ago we saw a small spike in these stocks, but since then they have been absolutely silent. What is your take on this entire pack, given that monsoons have been healthy this year? Are you seeing any positivity here?Neeraj Dewan: Yes, they have consolidated a lot. I was tracking one stock — GSFC — as well. There has been significant consolidation, and some of these companies are undertaking capex to expand capacity and add new products. All of that will definitely play out well for them, especially because the monsoons have been good, so demand should pick up. Still, a large portion of these companies’ revenues depends on government subsidies, which is always a niggling worry in the sector. But otherwise, looking at the scenario — the good monsoon and the consolidation that has happened — valuations have become attractive. Over the next six to nine months, I can see some positive movement in this sector.
Any takeaways or thoughts on what we could hear from the AGM this time?Neeraj Dewan: Like you rightly said, expectations are low this time. But definitely, some timeline on the Jio IPO and any related announcements would be something the Street will be looking forward to. Also, if you look at the last couple of quarters, Reliance Retail’s numbers have been good. So more visibility on their trajectory and how retail is going to shape up, as well as their long-term plan, will be interesting to watch as far as the AGM is concerned.
