Synopsis
Mayuresh Joshi, Head of Equity Research at William O’Neil India, believes that Senco and ideaForge are two companies that have potential for long-term success. He suggests that Senco, in the jewelry industry, is likely to perform well structurally. Meanwhile, ideaForge, a player in the drone market, has a strong and promising future. Joshi also discusses the wind energy sector, stating that changes in tariffs and transmission charges could lead to improved financial performance for companies in the industry.
ETMarkets.comMayuresh Joshi, Head-Equity Research, India, William O’Neil, says Senco and ideaForge are the two players which he feels should do well over a longer period of time, Senco from the jewellery space, structurally should start doing well. And even a player like ideaForge in the drone market, where the structural story probably remains very, very strong over the next few years.
Do you track INOX Wind, Suzlon, GMR, GVQ of the world because they are doing quite well for themselves? In recent months, people are calling it the turnaround story. Would you buy that argument?
I think a lot of price action has already happened in terms of expectations of what will now happen for the sector as a whole. Ten gigawatts are expected to be added over the next few quarters and few years as well. NTPC is expected to lay out a huge tender when it comes to wind energy itself. And therefore, a lot of changes have probably happened in terms of tariff determination because a lot of these companies actually got hammered down as tariffs were low and input costs were significantly higher in the last seven to eight years.
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With the changes and the interstate transmission charges that have taken place, what can really transpire is better numbers when it comes to balance sheet growth. Obviously, the kind of leverage that these companies have should come up quite significantly. The existing players are the only players which are probably left out of that entire pool, which was getting serviced, which was servicing the sector a few years back. So yes, the space looks pretty interesting. Structurally, I think there are a lot of road drivers in place for the next five to seven years. And that should drive earnings quite significantly for the sectors.
Have you looked at some of the recent IPOs or recent listings and the ones which are underway for subscription as well, anything that caught your attention?
Senco looks pretty interesting. They are opening up franchises, east is a big region for them. Generally, if you look at the gold market or the jewellery market itself, the unorganized players should slowly and steadily start coming down. The organised share should start moving higher from 32% as we speak right now, to 40% over the next few years, aiding a lot of these organized players at large.
So yes, Senco looks like a very interesting play, Kalyan is also a very interesting play. We would also like to have something on our watch list, a stock like an ideaForge. Defence stocks have done phenomenally well, and what ideaForge does in terms of its drone development, a lot of expectations in terms of drone orders expected to be released over the next few quarters. They have got almost a 55% share when it comes to the drone market, which is largely dominated by defence as we speak because of regulations.
But as rules start getting easier over the next few years and more civil and agricultural users start coming into play, the kind of products that they probably got is very, very interesting. And the kind of numbers, specifically margins that they probably produce are going to be well-maintained going forward as well. Coming to technological changes, the government is doing a lot more in terms of Atmanirbhar Bharat and the manufacturing in India that we probably have.
Price action is already damaging at this point of time for ideaForge. But I think these two players should do well over a longer period of time, Senco from the jewellery space, structurally should start doing well. And even a player like ideaForge in the drone market, where the structural story probably remains very, very strong over the next few years.
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