Valuations rich on logistics counters; watch out for M&As: Ajay Bagga

In a chat with ET Now, market expert Ajay Bagga shares his view on the consumer and logistics sectors.

ET Now: There has already been a fair amount of interest in some of the logistics and consumer names. Do you think that with more talk about the GST Bill over the next few sessions, we would see resurgence of buying interest in those pockets of consumer and logistic companies?

Ajay Bagga: Yes. It will open up the entire value chain. The ease of doing business would really get a big fillip by the implementation of the Bill. But, it is still a year down the line. That said, it would surely improve sentiment on these pockets.

ET Now: Yes, but you know what happened when the Modi government came to power. Everybody thought that the government could change things from day one. That is why the market rallied substantially. Now, there is a fair amount of interest ahead of the curve in the market. From that standpoint, would you be also more bullish on these names?

Ajay Bagga: It depends on the size and valuations. We have seen that logistics stocks are rallying quite significantly. We have even seen select initial public offerings (IPOs) by logistics firms faring well even after the listings. But, can these players run up with scale?
Therefore, I would be a little wary because of the valuations. Otherwise, the momentum is there and I am sure that on a technical basis they would be looking good in terms of owning them.

You have to watch out for mergers and acquisitions (M&A) with companies. Unlisted companies, which have cash with them may look to buy out some listed players. That could happen just to keep the network out of reach for competition or to own the network itself.
So, even those plays would be eyed on. Nonetheless, I would harping back that look at the valuations.