Managing Director & CEO of Hungama, Neeraj Roy says that Adlabs Films is one of the better opportunities for a conglomerate studio model, which is long overdue as far as the Indian market is concerned.
"I think it is not merely a retail story. It has got all the elements of value added composite entertainment in it," he added.
Excerpts from CNBC - TV18's exclusive interview with Neeraj Roy:
What have you been doing these past few months, first with the big drop in the markets and then the pullback?
My investments are nothing close to the activity and the manner with which everyone follows stocks. I do not really follow the market on a day-to-day basis, but I reckon like most retail investors, I had my bits of anxiety around the time of the drop, which happened in May and June. I tried to correlate that to the global trends, rising Fed interest rates and general liquidity crunch, which was there.
Fortunately, I had sold a little bit of my portfolio sometime around April or so. Quite frankly over the last two-three weeks I have actually been picking up stocks very selectively, but I am still not fully invested.
You are invested in Adlabs, Radio Mirchi, Entertainment Network India and also in PVR, what excites you in that space?
Our own company is largely into the digital entertainment space, so one can see the story unfolding out there. I think a company like Adlabs Films is one of the better opportunities for a conglomerate studio model, which is long overdue as far as the Indian market is concerned.
I think it is not merely a retail story. It has got all the elements of value added composite entertainment in it. The stock had fallen quite considerably from its highs of Rs 450 odd or something to that extent. So to that extent, it was an appropriate level to enter.
One is quite excited about the overall third wave of radio, which happened about four-five months back with the new licensing regime that happened. Within that I believe that companies like Entertainment Network India, ENIL, and certainly the new foray of Adlabs will stand to benefit because the market is a lot more mature now. I have invested little bit into ENIL as well.
You like hotels quite a bit, what have you been buying there?
Again largely driven by sectors that one understands, prior to starting up Hungama and prior to being in the investment business, I started my career in the hotel industry. So yes, I understand a little bit of that.
People are traveling, interest between India and rest of the world is at an all time high. In that context, companies like Indian Hotels, which has best leveraged to take advantage of this, is there. Yes, I had invested a little in Hotel Leela as well, but sold a couple of months back. I am still invested in Indian Hotels.
What is your sense when you speak to your friends who also might invest quite a bit in the market. Are they a bit wary of what is happening tactically, are you guys sitting on a lot more cash just waiting to see stability now or are you going ahead and buying?
A: It would be apt to say that there is still a bit of caution, whatever happened was a reasonable 20-25% sort of correction and many would argue that it was long overdue. But for most of us, by and large one does understand even at a corporate level, that there is a liquidity crunch, being driven by international markets and filtering into India as well. But I feel that the market at this point in time is in a phase of consolidation more than anything else.
So I do not think that there is high level of anxiety or panic, and certainly caution as far as investment is concerned and that's always prudent from a retail investor perspective.
Why did you buy Ashok Leyland?
That is something more from the infrastructure perspective, and you are going to see more of that happening. Between the two major companies I just felt that company is a little more undervalued as opposed to Tata Motors, so to that extent it is a small investment.
After the fall fighting have you been a bit shy of your midcap holdings because I believe that you have sold stocks like Welspun and KPIT Cummins Infosystems around this fall?
Typically there are higher levels of volatility in certain stocks of that nature, volatility has become the order of the day over the last 6-12 months in this market. I had invested in those stocks earlier, if I recollect Welspun at around Rs 20-Rs 25 levels or something.
One has seen these stocks appreciate a fair bit but only from that perspective, although the company continues to do fairly well.
In the large caps would Infosys be your top holding?
Certainly, I have been invested in that for quite some time, so I continue to hold onto that and I believe will continue to do so for quite some time.
In the next 2-3 years will you continue to have an exposure in equities or has this fall shaken you up a bit?
No, not at all. I must clarify that I am not in a position now to track the market on a day-to-day basis, but I understand the equities business and to that extent will continue to be invested in equities. For the sort of investments that I have, it really does not matter, a few percentage point here or there, but one is extremely bullish and positive about the overall industry.
As a company, we ourselves are into mobile, value added services and areas of that nature and whether it is retail or whether it is mobile telephone areas, these are constantly on the rise. So if one is invested in that for the next 3-4 years, frankly do not see anyone going wrong in that as long as one is invested with the right companies.
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