Expect Meaningful Growth In Overall Consumption Capabilities: HXGON Partners

本站添加: 2026-05-25

[00:00:00]Tushar Pradhan is with us, director Hexagon Partners. Tushar, it's you know, the the the rupee one and I think we had um Upasana, the economist from Kotak Bank in the morning with us and she was saying, "Well, you know, you can let it depreciate and and that perhaps is a good strategy as many say, but you got to watch it because, you know, it sometimes will feed depreciation warrants further depreciation and kind of becomes a self-fulfilling prophecy.

[00:00:28]Then you it it goes out of control.

[00:00:30]Uh but are equities reading what's happening to the rupee as a bit of a verdict on the state of the economy or or uh the the the state of the macros uh in that sense uh Tushar or you think I mean equity is the problem is different. Uh poor earnings growth so far and of course high energy prices.

[00:00:49]Yeah, so I think these are markets which are fairly intertwined and it's very difficult to kind of ascertain what exactly is driving uh you know, which market. Uh but I think it's starting from the currency uh I think I'll buy the argument that the currency is just uh an outcome of what the demand for the dollar versus the local currencies at any point of time.

[00:01:12]And I think if there is a lot of money coming into the economy, then it tends to appreciate the domestic economy and when it's going the other way or the expectation that there might be a lot of uh dollar demand is when uh it weakens against the dollar.

[00:01:28]I think that's a it's a very logical conclusion. Now, how this impacts the equity markets is pretty complex. Uh this will lead to certain companies which are export-oriented to actually report higher uh essentially earnings in the rupee. But on the other hand, if your country and your economy is uh very dependent on imports, then your import costs across the board go dramatically. And I think that's a it's a reflection of what inflation is likely to be and the higher the inflation versus the inflation of the the currency that you're comparing it with is where your weakness is like.

[00:02:06]So, in a sense, what our current dollar rupee equation is suggesting is that inflation in India is going to be dramatically higher compared to that in the US. And if you saw in the last few years of relatively stable currency exchange rates, there was a reversal that we had fairly stable inflation rates for a long, long time.

[00:02:27]And the US in fact actually appreciated significantly on an inflation basis. So, near zero, they started going up to 2, 3, 4% etc. Which was where the kind of relationship between the dollar and the rupee started to kind of become a little more stable, but I think what the current exchange rate is suggesting is that the input input costs are likely to go up for the Indian economy as such and that will have an impact on prices in general and inflation is likely to go up. So, I think that's that's an outcome of a a fairly robust economy. So, I don't think we need to control it in any way. Yes, of course, as as a largely importing nation, we need to make sure that it doesn't go up.

[00:03:10]All right. Hi Tushar, good afternoon.

[00:03:12]Good to see you again, but which are the probable winners of this? You know, because India suddenly got a competitive edge with regard to exports because of the depreciation that we have seen in comparison to even you know, a nation like China.

[00:03:25]And there would be select sectors that could gain just to name a few probable options, chemicals, you know, ferrous steel. They're exporting less. Currency is well as moving in our favor. Yet to see anything on ground, but these could probably be sectors that actually do well in the scenario that we're seeing.

[00:03:44]Absolutely. From a reported earnings perspective, it is definitely the case.

[00:03:48]In fact, in metals for example, it's a very interesting case that we don't need to really export metals to make the upside on the higher metals and the weaker rupee. Uh just the fact that global prices determine local prices as well. Uh just the dollar price of any metal going up in terms of local currency itself translates into higher margins for Indian companies because Indian companies the royal raw material supply chain is very much demarcated in rupees. So So that's clearly one area where you'll see important angle.

[00:04:21]But I think it's easier to just kind of come to this conclusion that this is the case. But the fact remains that if you are incorporating significantly lower economic growth, and I think that's something that we need to watch out for that all of these curves on consumption, etc., will lead to some sort of a consumption slowdown in the economy, and maybe that's something that the market is currently not really happy about rather than the upside in the earnings given, you know, weaker currency. So I think there's a broader picture that one can look at.

[00:04:54]>> [clears throat] >> It's you know, look at the Nifty change, one point, one and a half points. So absolutely undecided uh what to do. But I think a lot of it, of course, has got to do with this rupee, of course, is a signal is uh uh you know uh we're talking about Tushar also pointing out, but I think there's also the expiry factor as Nigel is pointing out the Tuesday factor in that sense.

[00:05:17]So there is perhaps that element uh at uh at at at play as well.

[00:05:23]Uh Dhanuka Agrotech big move at the bottom of the screen. I mean I mean, you know, the there are there are large moves appearing as far as individual stocks are concerned, and uh uh that is absolutely the case both on the way up and on the way down. We'll put some more names up uh in just a bit.

[00:05:40]Uh Tushar, uh you know, uh the the one area where we continue to see a fair bit of excitement, and uh both in the listed and unlisted spaces defense.

[00:05:52]Uh lots of stuff happening. Especially if you look at uh aerial uh you know, UAVs and I mean drones basically.

[00:06:00]Both listed unlisted. The largest listed player is IdeaForge got a big leg up after IAF will upgrade.

[00:06:06]Uh and of course I mean other large listed companies also looking at entering the space. Uh any thoughts on this uh area? I don't know if you have a view on IdeaForge specifically if you will. If you do, that'll be great.

[00:06:18]Yeah, I think in the defense uh area, we've seen probably a year or so of significant uh flattening out of the excitement and the euphoria we saw the year prior to that.

[00:06:29]Is when uh all of these companies came in contention for very large orders, etc. I think as reality sets in, we realize that this is not a one-way street. Uh and as you mentioned, there are certain areas within the defense sector which suddenly come up as very attractive. And there are certain sectors which kind of go a little bit under the radar because either the lead times from order to delivery sometimes stretches. Sometimes there is also a preference for a certain uh ordinance or a certain level of defense supplies over some other priorities. And as a result of which there is volatility. But I think as a as a whole sector, I think one should be very confident that this is going to expand. Now, which exactly and which company within to focus, I think it's up to the individual investor to figure this out. But I think as an exposure in a portfolio, looking forward for the next 5 to 10 years, uh and of course discounting for maybe some of the premium pricing today, I think this is a very exciting space to be. So, I'm making the distinction between the prices that they trade at and the potential that these companies carry because clearly there's a lot of business coming their way. And that makes that for of a very very robust model going forward. So, I think it's it's an interesting place, clearly.

[00:07:48]Very quickly, Tushar, before we let you go.

[00:07:51]You know, since petrol, diesel, the shock has is still moving across the nation on various parameters. On the autos front as well, that could be that, you know, higher amount of shift towards EVs. Any theme that you're playing out there? The two-wheelers or maybe Mahindra, Tata Motors?

[00:08:08]Yeah, but I think one is missing the whole picture as such because local mobility is where EVs really dominate.

[00:08:17]But if you're talking about passenger vehicles, prestige, you know, the SUV range, etc. I think the consumption pattern is leaning towards, you know, more, I would say, discretionary, higher value products as well. So, I think the the opportunity is here really is not driven by EVs per se and then start focusing only on the companies which have EVs. I think the entire space is likely to grow. We're also going to see a significant shift in the demographics where a lot many more people are likely to be able to consume these products than ever before, which means that again sets it up for for a very nice growth curve for the next six to seven years at least. And within that, I think it's it's it's your choice to, you know, kind of put it across in a diversified fashion. Maybe some exposure to really nice long-standing EV companies might be worthwhile. Mm.

[00:09:14]Okay. All right.

[00:09:15]You know, let's just dive into this a little bit more, right? I mean, EV penetration