"If crude moves up, crude moves down, BRN move up, move down, fuel prices remain the same.

Now some key state elections will come in a few months so that will put further pressure not to increase fuel prices," says Sandip Sabharwal , asksandipsabharwal.

com. The larger point here is that if I look at anything which is cheap or anything which has value is oil marketing stocks . Now in and around election we always tend to get worried, what will take centre stage, politics or economics and so far we can safely say that the government has done nothing to make minority shareholders worried, which is that fuel prices have been increasing in tandem with international prices, not 100% but 70-80%. So, given that everything in the market has run up, is there merit in buying HPCL , BPCL ? Sandip Sabharwal: I do not buy these stocks simply because of the fact that they have no pricing power of their own. So, I think that entire deregulation of fuel pricing that has gone for a toss, there is no deregulation now. Fuel prices I think were not increased for months now, it has been I think 18-19 months and there was some price cut also prior to the elections.

So, if crude moves up, crude moves down, BRN move up, move down, fuel prices remain the same.

Now some key state elections will come in a few months so that will put further pressure not to increase fuel prices.

Unlock Leadership Excellence with a Range of CXO Courses Offering College Course Website Indian School of Business ISB Chief Digital Officer Visit Indian School of Business ISB Chief Technology Officer Visit IIM Lucknow Chief Operations Officer Programme Visit So, people who are betting on these stocks have to bet that crude prices will remain subdued.

PSU stocks may have done well but many of them not very well understood.

Could this space be an area to look at if indeed some policy measures come? Sandip Sabharwal: For ship builders, like you said, most of them are PSUs which are listed.

There were some private builders which came in, all of us know 15-20 years back in the expectation that ship building will pick up in India and went bankrupt because no orders came through.

Now it is a different cycle, different government and orders are coming through for these companies.

The good part for them is the visibility of growth.

The bad part is the valuations are excessive at this stage, which is true for many of the sectors which are doing well, their visibility is very good, the valuations are also very high.

So, I think people need to wait for better opportunities to buy for these shipyard companies.

They are illiquid, retail participation is very high, so they tend to react very rapidly also.

But I think there is little value at these prices.

You and me have argued in the past that I have this sentimental bend towards TCS. It has been a 20-year association with them.

You have always looked at TCS not based on sentiment, but you have always looked at TCS based on numbers.

I have come back with the following that there seems to be a quarter-on-quarter improvement.

What was zero percent growth became 1% growth.

Then, it became a 2% growth.

Now it has become a 2.5% growth.

So, are we getting a sense that the contraction in IT is over and the expansion phase has started? Sandip Sabharwal: Yes, I think so. I think the expansion phase has started.

Now, the key is the pace of the expansion because can these companies go back to double-digit growth or not given their size and the structure or will they be a 5% to 10% kind of growth company I think that is the debate.

So, if you are in that double-digit growth camp, then I think they offer very strong time opportunities.

But if you believe that growth will be below 10%, then they will give moderate returns from here.

I do not think there is much downside.

But the returns could be moderate, more near 10-12% on a yearly basis.

So, I think that is the key. It is very tough to say whether they can go back to double-digit again or not. So, double-digit growth let us assume is not coming.

Let us assume that double-digit growth and it is a very high probability that FY25 no double-digit growth, FY26 also no double-digit growth.

But if one assumes that a 5-6% growth is there, let us say for the industry, maybe a percent higher for TCS because it has got advantages of pricing, where could the stock move with this underlying framework that the growth is going to be better than last year, but it will still be in single digit? Sandip Sabharwal: So, in that case I think these will be 8-12% kind of return stocks because there cannot be further re-rating because the stock already trades at 30 PE, so the further re-rating will not be possible in that scenario.

So, there could be some positive sentiments come through as the rate cycle reverses, as the US elections get over.

So, I think 8% to 12% then could be a reasonable expectation.

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