ADVERTISEMENT

Why Max Life’s Mihir Vora Is Having A Change Of Heart About Telecom Stocks

Here’s when telecom stocks will be good to buy into. 

Customers gather outside a multi-brand mobile phone store displaying signage for Bharti Airtel Ltd. and Vodafone Group Plc in the old Delhi area of New Delhi. (Photographer: Prashanth Vishwanathan/Bloomberg)
Customers gather outside a multi-brand mobile phone store displaying signage for Bharti Airtel Ltd. and Vodafone Group Plc in the old Delhi area of New Delhi. (Photographer: Prashanth Vishwanathan/Bloomberg)

Max Life Insurance Company Ltd. was extremely underweight on telecom stocks when the Supreme Court ruled against the companies in the adjusted gross revenue case. It is now close to neutral on the sector. But telecom will be the ‘it’ sector to buy into if companies start increasing the tariffs they charge customers, according to its Chief Investment Officer Mihir Vora.

“This will be a segment to start increasing exposure in,” Vora said in a conversation with BloombergQuint. This comes at a time when three of India’s largest telecom players—Reliance Jio Infocomm Ltd., Bharti Airtel Ltd., and Vodafone Idea Ltd.—have announced an increase in tariffs in December. While there is still “fluidity” regarding the price hikes, it will make telecom stocks popular whenever it happens, Vora said.

BloombergQuint’s analysis shows that even a 10 percent hike in tariffs will boost their operating profit by 20-37 percent.

Other highlights:

  • Still a bit of caution in the market.
  • We are not in normal times, we have a situation in which $15 trillion worth of central bank bonds are trading at negative yields.
  • India can’t stay at 4-4.5 percent GDP for too long.
  • There is still enough value out there in the non-top 50 names.
  • There are stocks to be picked out with a two-three year view.
  • Bullish on infrastructure, manufacturing, real estate sectors.
  • Large listed players may continue to gain at the cost of unlisted unorganised players.

Watch The Full Conversation With Max Life Insurance’s Mihir Vora: