“So I can’t talk specifically about individual companies, unfortunately, because our compliance doesn’t allow us to, but in general, when large conglomerates start looking at multiple companies, the problem becomes: are you a holding company or are you an operating company that has multiple, perhaps unrelated investments, as well,” he said.He pointed out that as companies grow independently, structural clarity becomes crucial. “We’ve seen some of these investments actually divest themselves by splitting the stock of their companies by…, I mean in a sense, breaking away from the larger entities, and I expect that to happen, that’s in the best interest of the shareholders,” Shenoy said, adding that cross-holdings often dilute transparency. “Creating large monolithic entities is not helpful,” he noted, arguing that once newer companies mature, “you need to get it listed independently and the sum of the parts here will be greater than the whole.”
On the tobacco sector, Shenoy struck a cautious tone after the excise tax announcement. He highlighted the long-term structural challenges facing cigarette manufacturers. “The first people reduced smoking overall. The overall numbers and volumes have gotten smaller and smaller every year over a long period of time and will decrease over time,” he said, pointing to changing consumer behavior and alternatives such as vaping.
He also identified policy risks and margin pressure. “The government’s ability to extract taxes from just cigarettes… I think the idea is that tax revenue from this will decline and the companies that focus solely on cigarettes as a source of revenue should consider diversifying into other sources,” Shenoy said. He expects volumes and profitability to remain under pressure over time, making diversification into FMCG, hospitality or other businesses increasingly necessary.
As for the quick service restaurant (QSR) space, Shenoy suggested that the definition of the category itself is evolving. “What was a quick service restaurant is now offering quick service through the restaurants themselves,” he said, noting that delivery platforms have blurred traditional boundaries. While he acknowledged long-term opportunities, he warned against aggressive valuations. “My sense is that at this point, most of the players on the QSR list tend to be a little bit more expensive,” he said, adding that increasing competition could weigh on returns. However, the prospects for the electronics industry and the industrial sector appeared much more constructive. Shenoy said recent policy measures and lower interest rates are combining to support capital spending. “There are two things going on: the PLI, the incentives given by the government and secondly, lower interest rates after the RBI cut rates in December,” he said. He described electronics manufacturing as a “huge, huge space moving forward,” though he warned it will remain a long, decade-long journey.
In the energy sector, Shenoy says the investment cycle is gradually shifting from generation cuts to transmission and distribution upgrades. While nuclear energy remains a long-term story, he believes the short-term opportunities lie elsewhere. “I like the distribution theme a lot more at the moment,” he said, pointing to last-mile transmission, metering and equipment manufacturers as the main beneficiaries in the current phase.
Within the financial services sector, Shenoy expects public sector banks to outperform in the short term. “PSU banks have probably done quite well,” he said, citing stable margins, a broad deposit franchise and potential gains on government bonds. Smaller private sector banks could also deliver positive surprises, while larger private sector lenders may continue to deliver subdued performance until overall credit growth improves meaningfully.
On autos, Shenoy attributed the recent strength to policy support and affordability gains. “From an auto sector perspective, my views largely stem from the VAT reduction that took place in September,” he said, adding that lower interest rates will further support demand. His order of preference remains clear: ‘four-wheelers, two-wheelers and then commercial vehicles’, with tractors largely depending on monsoon conditions.
Overall, Shenoy’s comments underscored a market that is no longer driven by a single narrative. Instead, structural shifts, policy incentives and sector-specific fundamentals are increasingly driving investment outcomes, reinforcing the need for selective long-term positioning rather than broad-based exuberance.
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