Festive season, tax relief to drive consumer durable demand: Sudip Bandyopadhyay

Synopsis

Sudip Bandyopadhyay suggests that GST reduction and other factors will boost consumer durables and cement industries. He recommends Voltas and Amber Enterprises in the consumer durables sector. While positive on market infrastructure institutions long-term, he notes potential short-term volatility due to regulatory focus on curbing speculation, impacting exchanges and broking houses.

"All this was already auguring well for the consumer durables pack. Now, the GST reduction on top of everything else is a bonanza, and I am sure consumption demand for consumer durables will pick up significantly during the festive season. So, one can look at air-conditioner manufacturers like Voltas or even OEMs like Amber Enterprises. These are good stocks to buy from a long-term perspective even now," says Sudip Bandyopadhyay, Group Chairman, Inditrade Capital.

I guess one is seeing the broadening of the GST rationalisation sentiment play out in the markets, and newer names are now joining the bandwagon. Is there anything you would recommend from the overall consumption theme?
Sudip Bandyopadhyay: Well, consumption, of course, is exciting, and I would recommend indirect consumption plays like cement. This industry has been doing pretty well. If you look at the quarterly numbers, they have been quite impressive. The industry has implemented excellent cost control, demand is picking up, and the government is spending heavily on capital expenditure. This is leading to a significant increase in demand, which should bring back pricing power. Post-monsoon, we will see a lot of excitement. On top of this, GST rationalisation will benefit the cement industry in a big way, as it was earlier attracting 28% GST. I think the per-bag cost will come down by ₹25 to ₹30 once rationalisation happens. That should spur further demand and help the industry. So, cement is one segment where we have been bullish, and our conviction has only increased with this GST proposal.

Beyond that, another segment everyone is talking about is consumer durables. We have been positive on this space recently because of several factors: the festive season is approaching, the monsoon has been good, interest rates are coming down, and the government has given income-tax relief to the common man. All this was already auguring well for the consumer durables pack. Now, the GST reduction on top of everything else is a bonanza, and I am sure consumption demand for consumer durables will pick up significantly during the festive season. So, one can look at air-conditioner manufacturers like Voltas or even OEMs like Amber Enterprises. These are good stocks to buy from a long-term perspective even now.

What is your take on the exchange ancillary space? We saw good upticks in recent sessions, but with these kinds of statements coming in and the sideways action we’re noticing in capital markets ancillary platform stocks, do you think the long-term undertone remains bullish?
Sudip Bandyopadhyay: Well, if you are talking about a three-to-five-year time horizon, definitely yes, because we believe market infrastructure institutions will continue to do well. Financialisation of savings is real. But leaving aside the three-to-five-year horizon, if you look at a slightly shorter time frame—say three to six months or a year—there is volatility and there are challenges.

The regulator and the government are very focused on protecting the common man and small investors. There is a consistent theme in government thinking: whether it is banning online games or tightening rules around F&O trading, the aim is to reduce speculation. Data shows that more than 90% of retail traders lose money in F&O, so they are taking multiple steps to curb excessive speculation. Among these steps is what the SEBI chairman mentioned: if you extend the contract time horizon, the number of contracts will naturally come down, trading volumes will decline, and that will impact exchanges like BSE and also broking houses with significant derivative volumes.

That is why these stocks are reacting. Also, let’s not forget that none of these stocks are cheap; they are fully priced. So any news suggesting that their income may suffer will definitely have a detrimental impact, and that is exactly what we are seeing. Whether it is BSE or Angel One, there is a rationale for the correction. I don’t think we can dismiss this move by SEBI, because it is very much in line with the regulator’s and government’s overall thinking.

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