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00:00Tell us 3-4 stocks that you think could be the next Titan over the next 5-10 years.
00:05In terms of ideas, while I get the sectors,
00:085 stocks that are in your model portfolio that you highly, highly optimist and bullish on?
00:14I don't want to mention specific stock names because of the regulatory requirement,
00:19but what I would say is, I think if you're trying to play EV battery,
00:22there are 2 companies, right, which are mostly in lead-acid battery,
00:25who have now transitioned very nicely and investing into the EV battery capacity.
00:31So, you have to take a little long-term view on this and I think we are talking about numbers
00:38like each of them adding some 6 gigawatt in the next 3 years, but if you look at what is
00:43happening in China, there are companies which are operating at 300 gigawatt each of them
00:47and China's total capacity on EV battery could reach 3000 gigawatt and EV penetration in China
00:53is almost 50% at this point of time. So, there needs to be a leap of faith and if you look at it,
00:58this 6 gigawatt can turn out to be easily 20-25 gigawatt in 5-6 years time period.
01:04That is the kind of scalability potential that these stocks offer.
01:08Same as with some of the solar cell manufacturing companies. Today,
01:11we have solar modules which are being made in India, we are self-sufficient,
01:15but if we look at the solar cell manufacturing, there are hardly any capacity we can count,
01:20it could be closer to 3 gigawatt and the demand for solar modules in India can touch
01:26even up to 25 gigawatt and right now we are importing a lot of these cells. I think a
01:33transition to India at a reasonable price, we can domestically source these in India as well.
01:39So, over the next 4-5 years, you will see a lot of this solar module manufacturing is trying to
01:43become solar cell as well and there is a good opportunity coming there in the IPO market,
01:48which are interesting there. So, broadly, these are areas where the companies which
01:55are operating in these areas look interesting to us. On the financial side, we feel that
02:01there is a South-based small-ticket lab lender. This guy has grown from 2,000 crore book to 8,000
02:10crore in a very short period before COVID and after COVID. He can grow almost like 30-40%
02:17in the next 5-year time period and take his book from 8,000 crore to almost like 35,000 crore.
02:23It's a company that does almost 8% ROA and you can look at it easily closing at around 7% ROA
02:31in 5-year time period. So, if you put these numbers and look at the current valuation,
02:35these are companies which can easily double in the next 3-year time period.
02:39So, I can mention about similar company in affordable housing space, which is also growing at
02:45at that kind of level. So, broadly, we feel that within retail credit, if you focus on this
02:51in the small-ticket areas, which is more on the used vehicle, affordable housing and
02:57lab, pretty interesting companies are coming through. But obviously, we need to be very
03:01careful of how is the underwriting process. So, we have been very selective on which stocks to
03:05look at and that is what we have learned from our parent also. Being an NBFC, if you are in
03:12the right profitable segment, which is growing, you make a really good return over the long term,
03:18which is what Bajaj Finance did for a long period of time. So, we are looking for next
03:21Bajaj Finance out of these companies. On the consumer side, I think the sector itself is not
03:29doing well at this point of time. But we have been lucky in collecting some of the stocks right
03:34there like Zomato, Trent and Titan. We still feel some of these ideas have potential to
03:40outgrow FMCG space and are available at a reasonable valuation, we think.