ITC demerger a sell-on-news in short term; more catalysts in future: Andrew Holland

Andrew Holland, CEO, Avendus Capital Public Markets Alternate Strategies LLP, says that in the case of Kotak Mahindra Bank, there is still a bit of nervousness over the cost of deposits and how that is going to affect interest margins going forward. That is one of the key concerns. There is also ongoing concern about what next after Uday Kotak and how that is going to play out?

Do you track ITC closely and have any views on the demerger? Do you think multiple levers are available for ITC to go to Rs. 500 now?
The market is probably doing a sell-on-the-news and that was the same to some extent with Reliance. We had a run-up ahead of the news and that got factored in. I am sure there will be more catalysts in the future but one of the big catalysts for both these stocks in the very short term has probably played through the market prices in the run-up to these announcements.


What have you made of the private banking names? I am wondering what is the disappointment with Kotak Bank's numbers? I wonder why the stock has fallen despite good numbers?
From the analyst reports that I have seen and from the commentary from the results conference call, I think there is still a bit of nervousness over the cost of deposits and how that is going to affect interest margins going forward. That is one of the key concerns. Of course, the ongoing concern is what next after Uday Kotak and how that is going to play out? These are the only two reasons I have seen. It will probably continue to concern the market in the very short term in terms of the pressures on the business as well as the senior management. So that is what is probably bothering the stock at the moment in the very short term.

For autos and two-wheelers specifically, what is your view?
The sector is still ripe for more growth but in the short term, I would probably play it through the auto component side rather than the two-wheelers. I still think EV has got some way to play here. My concern is that I am not sure which one it is going to be. They are all probably going to be winners in some respects, but I am not sure which is going to be the key winner.

If you see the US, you could quite easily say Tesla is going to be there because of all the breaking ground work it has done in terms of getting to the position where they are. But in India, we are still in that open playing field where I am not quite sure who is going to emerge as the winner. So I would rather play it through the component side at this moment.