Ram Kalyan Medury of Jama Wealth
PB Fintech is a good proxy for insurance demand in the country, but that does not necessarily mean that we simply buy and hold the stock forever, Ram Kalyan Medury, Founder-CEO, JamaWealth, said in an interview to Moneycontrol.
With 23 years of experience in technology and financial services, Medury said that since benchmark indices have run up considerably of late, they may not gallop further in the near term.
After the recent flurry of activity, Medury feels that there could be a mellowing down of the primary markets for the rest of the fiscal due to the global macro situation. Edited excerpts of the interview:
Is PB Fintech a good proxy for the insurance segment? How will it be impacted by Bima Sugam (a platform where all life and general insurance policies can be purchased)?
Yes, PB Fintech is a good proxy for insurance demand in the country. But that does not necessarily mean we simply buy and hold the stock forever. The stock has corrected nearly 65 percent, become one-third of its IPO price.
There have been some regulatory changes on commission limits which might augur well for brokers/agents. However, we expect more regulation that will allow smaller insurers with leaner cost structures to go direct to the customer. As for Bima Sugam, it could become the equivalent of the UPI for the insurance industry.
These two factors might negatively impact PB Fintech.
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Fertiliser stocks have run up well recently. Are you bullish on this space, are you taking any positions in the sector?
We are positive about this space and have some exposure. We are seeing good year-on-year (YoY) and EBIT growth in the companies we are tracking. Given the trend of falling raw material prices, margins should expand slightly as well.
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Do you think the rest of the fiscal would be a good period for the equity market, given the record highs seen on the benchmark indices?
We are not in a position to predict short-term trends in the market. Having said that, since the indices have run up of late, they may not gallop further in the near term.
Gas stocks have also done well. Your thoughts.
We have some exposure here too. While the stocks have performed well in the short term, one cannot predict the next short term due to the volatility in energy prices globally stemming from the Ukraine-Russia conflagration.
Speaking of recent results, the companies did see pressure from higher gas costs, which affected their margins anywhere between 13-18 percent.
However, the market perhaps expects the global situation to ease, resulting in their good short-term performance.
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Do you think all the worries, including over oil prices and geopolitical tensions, are fully priced in now?
The short answer is that we do not know. We suspect that contrary to the recent all-time highs, the risks posed by the geopolitical situation and a looming global recession are still out there. While our outlook as of now is stable, the Ukraine war still rages on. So one must continue to focus on companies with strong fundamentals.
Most public sector enterprises seem to be backed by bulls now. What are your thoughts? Where would you put your money?
We generally avoid companies with significant regulatory overhang. We also do not track who is holding which stock, except for making sure that promoters hold a substantial stake in the company.
Given these two principles, we will put our money only on stocks that are exceptional in terms of our Roots & Wings philosophy, i.e., consistently high return on equity (RoE) and strong earnings.
With the revival in secondary market sentiment, do you see the primary market buzzing a lot in the rest of the fiscal?
We do not track unlisted stocks. We also do not recommend investing in IPOs if one is a long-term investor because of the uncertainties, lack of track record, etc. There will surely be some exceptions but in general, we have seen a poor correlation between long-term wealth creation and investment in IPOs.
However, to answer your question, our suspicion is that there could be a mellowing down of the primary markets for the rest of the year due to the global macro situation.
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