'Didn't invest in Hyundai IPO; not looking at Swiggy': Amit Goel of Pace 360 explains why

Amit Goel, co-founder and chief global strategist at Pace 360, on Friday shared his rationale behind not participating in India's biggest initial public offering (IPO) -- Hyundai Motor India Ltd. "We steered clear of the Hyundai Motor India initial public offering (IPO). I would rather buy Tata Motors at a single-digit valuation instead of buying in an IPO of Hyundai. I think the (retail investors) response is also been lukewarm. Though, I don't have a doubt that it is going to list at some premium over the IPO price. But, it is not attractive for me," Goel told Business Today TV.

"We didn't invest in Hyundai. We are not looking at Swiggy and also many other IPOs which are coming at obnoxious valuations or they are coming from loss-making entities. But, Waaree Energies is something which is of interest and we are definitely going to participate there," the market specialist also said.

"We are looking closely at Waaree Energies. In fact, we would probably pre-IPO or IPO, we would want some action there," he added.

When asked about the current market situation, he said, "This market is finding a bottom. We have been increasing our holding in our multi-asset PMS. We've been buying aggressively for the last weeks ever since the FII exodus started. At the end of September, we were at 1 per cent equity exposure on our entire PMS. As of now, it is more than 70 per cent. If the market continues to provide us with good entry opportunities over the next few days, we will probably take it up to 80-85 per cent."

In response to a query on exits, Goel said, "When we were low on equities. We were sitting on duration in fixed income and precious metals. We've exited our duration bets almost entirely in the last weeks. And, we have also been exiting now over the last few days our investments in precious metals because gold has been making new highs and we are contrarians to the core. In October last year, we had given a bullish call on gold. Between then and now, gold prices have gone up by more than 50 per cent in just one year's time and I just do not see how this momentum can sustain. So, we've got out of precious metals and duration bets. And, we are now almost now 70-75 per cent in equities and this will keep going up in case the market does not go up too fast too much. We will probably keep buying for the next few days."

In equities, we have bought a combination of large caps, midcaps and small caps, he mentioned. "Bias is definitely towards largecaps and midcaps. Large- would be about 77-80 per cent, midcaps would be 15-20 per cent and small caps would be 5-7 per cent of the entire portfolio that we've accumulated. We have not bought these stocks for the long term. My long-term view remains intact that Indian markets are still very pricey for my comfort," Goel added.

"There are some macro-economic issues in India such as earning growth slowdown and lower urban consumer spending. There are a lot of concerns around that, which is why there was a FII exodus. They have already sold stocks worth Rs 75,000 crore this month. Once we get into a seasonally bullish period (October-end to mid-January), we believe that markets are going to claw back to their all-time highs or near levels and there would be an exit opportunity. Those who are running very pessimistic right now will turn optimistic again. And, we would want to get rid of all our investments by January. So, this is not for the long haul and just for a few months," the market expert also said.

Goel also disclosed his stock-selection strategy. "Apart from the combination of large caps and midcaps, what we have done is we have not bought any stock which is at a P/E ratio of more than 30, barring a few exceptions. We have bought the beaten-down sectors such as banking (both private and PSU), aeronautics, defence, railways, PSUs and oil marketing companies. Since yesterday, we've started buying IGL (Indraprastha Gas Ltd) and MGL (Mahanagar Gas), which have been hammered because of this new policy by the government that the APM quantities will come down. Today, we've bought Manappuram Finance Ltd because we believe what has happened does not merit a 14-15 per cent cut in Manappuram," he stated. For the unversed, the Reserve Bank has asked Manappuram Finance's IPO-bound subsidiary Asirvad Micro Finance to halt its sanctioning and disbursement of loans.

"We are very conscious about the P/E ratios, fundamentals and macros. If we believe that the Street is extremely pessimistic on some of these fundamentally good counters where the valuations are not rich, we will probably go ahead and buy," Goel further said.