No merit in investing in aviation sector: P Phani Sekhar, Angel Broking

P Phani Sekhar, Fund Manager-PMS, Angel Broking, in a chat with ET Now, gives his views on aviation stocks



What is the call on aviation pack?

You can always play aviation pack from a near term perspective because if these rumours gather strength about FDI in aviation being hiked to 50% considering the current optimism around the aviation sector, especially with the stronger incumbents increasing market share, suddenly people will put 2 and 2 together to form 22 and say that aviation is the next best thing to happen to India. From that point of view, there can be a trading pop up of anywhere between 10% to 20%. But from a medium to long term investing point of view, I clearly see no merit in investing in aviation simply because even if you look at the current quarter, while it is true that markets shares have increased but I am not sure whether the companies are going to report any profits this quarter. Yes the losses are going to be trimmed but in a quarter where your market shares jumped by 400 to 500 basis points, if you still cannot make profits just because crude is at 125. I am not sure about the competitive dynamics of this industry.