Long & Short of Markets: The billion dollar question about Zomato’s true value; should you avoid telecom stocks?

Hope is a very powerful emotion. But holding on to hopes of good days when a company is on the brink of bankruptcy is exactly the irrationality that market veterans have been warning of for generations. This is what happened with Vodafone Idea shares in the past week. Government burying retro tax led a surge in Vi’s shares as Vodafone would benefit marginally. It’s astounding to see the optimism of retail investors while the promoters themselves are unsure about the survival of the business. Read more on whether to buy telecom stocks now, outlook on lenders, ‘s valuation puzzle and more in this week’s edition of ‘Long & Short of Markets’.

When competition drags growth

Telecom sector has seen one of the fiercest competition among the three key players. Shareholders of

and Vodafone Idea have been waiting for addition of value added services, better products and services and an increase in ARPUs for a few quarters now. But all the space is seeing is AGR dues trouble and a fight down to destruction among the three players, says market expert Ajay Bagga.
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Bloated valuations? Worry not!

One major concern voiced by market watchers across the spectrum is build-up of frothy valuation. Surging PE multiples have been seen as a sign to get cautious, but things may not be that bad, opines Manishi Raychaudhuri of BNP Paribas. He justifies these pricey valuations with rising broad-based earnings estimates.
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Growth vs caution

Nirmal Jain, Chairman, IIFL Group, says it is time for lenders to grow and not be cautious. With unlocking, comes back business activities and a requirement for working capital. Hence, the demand for credit. The Dalal Street veteran sees this as a ‘conducive environment’ for lenders to grow.
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A billion dollar question

What’s the true value of Zomato shares? Even valuation guru Aswath Damodaran can’t answer this question with one answer! He has the worst and best case scenarios which can be applied based on the narrative an investor uses to look at Zomato’s business. His range lies between zero and Rs 423 per share! In the end, he calls this both useless and misleading.
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Asset allocation lessons

Buying into assets during peak valuation goes against the fundamental principles of investing. But sitting on piles of cash in an uptrend market may lead to missed opportunities. Here’s what experts have to say about investing in the current market.
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