Deven Choksey on why pharma, not IT, is a safe haven now

Deven Choksey

The safe money is getting parked in pharma because even in IT, we are seeing a meltdown in the US markets, Deven R Choksey, CEO & MD, KR Choksey, tells ET Now.

IT seems to be getting rusty but is it time to revisit pharma?
There are challenges as far as the market technicals are concerned. A lot of uncertainties in the global market is basically the result of this weak technicals that we are seeing, including the US-China trade war and Brexit related issues. Given that kind of a situation, confidence to buy into some of the values probably will not be as much as it would otherwise come in the normal situation. The safe money is getting parked in pharma because even in IT, we are seeing a meltdown in the US markets. So, pharma distinctly remains a relatively better choice. The time has arrived for many of the Indian generic pharma companies which have gotten over their USFDA related issues.There have been new launches in the second half of the financial year in US market by many companies including Lupin, Dr Reddy’s, Cipla and even Glenmark.

What is your take on Maruti?
From industry point of view, the last few months have been relatively challenging. In the market, finance was not easy to come by and due to the restriction of credit lending, probably victimisation happened in the passenger vehicle segment to begin with. I do not see this situation lasting permanently and normalcy should return once availability of funds becomes easier. The strong argument is that the per capita income of people is increasing as a larger amount of money is being spent on infrastructure and other areas of activity. This could be an adjustment or consolidation period for the industry in which you might see a couple of months of rationalisation happening. Companies with a larger distribution reach and a preferred brand among consumers should be relatively safe.
Maruti would be in that particular category. Also, some of the newer models coming into the market could be one of the reasons for deferment in the buying season and moderation in the sales. But yes, if the market has corrected, Maruti would become an interesting buy opportunity.

How are you scouting for investment opportunities within two-wheelers?
A very interesting time is coming up for the majority of the two-wheeler companies. On one side, there is the Eicher kind of company and now Mahindra Jawa has been revived — vehicles in the upward range of around 250-300-350 cc. On the other side, there are the sub-300-cc vehicle range which is catered by Hero and the Bajaj and Suzuki and others. From that perspective, the industry is clearly in two parts. The Bajaj portfolio starts from 100-cc vehicles going up to as high as 700 or 1100-cc from Husky or Husqvarna brand which they are likely to be launching soon. One has to look at these companies in two parts; one which is typically catering to only domestic markets and probably earning smaller margins in the process. Others like Enfield, which is Eicher and that is catering to the premium segment of the market where the market growth is relatively limited for the reason as Marutis. I find Bajaj a relatively more stable company in this entire bracket. They are starting from entry level bikes, going up to premium level bikes, not to forget that they have a strong portfolio of exports within their basket. This particular company remains better off compared to the others in the two-wheeler space. We prefer Bajaj for the diversity of its portfolio along with the distribution reach in global markets.

Source : economictimes.indiatimes.com

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