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Metal is an old story, allocate upto 33% to new gig economy stocks: Ajay Srivastava

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A Sebi discussion paper for independent directors has come up. If that is adopted, the whole midcap space becomes really fantastic for investors to go in, says Ajay Srivastava, CEO, Dimensions Corporate Finance.

Let us work with the assumption that this year will be better on the health front. Is there merit in buying a travel company, a tourism company or a hotel company with the assumption that the pent-up demand would be unleashed in the next three to six to nine months?
Worldwide, the hotel industry gives the poorest reward to the investors. They do not give returns to investors for whatever reasons, asset intensity is high and the cost is very high. For small bursts of time, when they become mispriced as an asset, you can make money and there is such an opportunity today. There are two reasons for that –leisure travel as well as the postponed marriage season which is going to come around. India has a very large market driven by marriages and that is what is going to make big money for the hotel and allied industries in the next 12 months.

A huge amount of money is going to be made but the key is to get out after the next year’s results are out because by then you would have ridden this thing. Hotels are a wonderful play today. Almost zero new capacity is coming up in the market. If the marriage season kicks in, there is going to be a huge upside for the hotel stocks. It is an absolutely wonderful play but it is a one-year play. It is not a five-year play. It has nothing to do with your plans for your retirement fund or children’s education. You have to get in here knowing that you will exit the stock after 12 or 15 months.

The second point, a Sebi discussion paper for independent directors has come up. If that is adopted, the whole midcap space becomes really fantastic for investors to go in because it is going to change the way Indian companies are governed. Investors will find a lot more comfort with B and C categories companies. We have seen mishaps, not only in B and C category companies, but even in Vedanta, an A category company. How did the independent board give a loan to the parent company? Under the new guidelines, those very directors would be removed from the board and a clean set of independent directors would come on the board of a company like Vedanta.

If this paper gets adopted, big buying will happen in midcap stocks without any governance overhang. More than economic fundamentals, governance fundamentals and problems have plagued 90% of the Indian market.

What about metals, building stocks, ancillary plays?
Almost 30% of our holdings are in those segments and I have only one word – buy, buy and buy. These cycles last for years, maybe even a decade. There may be corrections. It is not going to be a one-way street. But these cycles come in 10 years and then they go after and then you get off the track for 10 years. It has just started at this point of time. If India says we want to grow at 7%, 8% or whatever the number is, the kind of requirement of materials is going to be humongous. All these metal companies, by and large, have addressed the debt problems. It is a clear case of buy. So metal companies — ferrous and non-ferrous, building product companies which are tiles, paints, are good. Most important, the big players in real estate have now come into India and they are under radar. Now it is a more organised market.

I think the first 10-15% of re-rating has happened, the balance 75% to 80% re-rating is still to come over a period of time. You got to be patient but that is the way to be; park your money and be there.

Lastly, an absolutely wonderful dividend is coming from these companies because the parents of some of the companies like Vedanta, Hindustan Zinc need the money. In steel companies, there are lots of free cash flows, lots of dividends; none of them are doing large capex and the money has started flowing in. In the first 12 months, they have seen the free cash flows becoming positive. It is a long cycle, be patient and the only answer is buy, do not sell these sectors.

What kind of names are you looking at within real estate and ancillary plays? Anything that you are quite bullish on in terms of the broader market?
India has become a land of stories. Who would have thought that I would buy a fashion wear company? Last month we started that. Metal is an old story. You wait for a correction. But the newest stories are coming out every day, the new listings are coming out. A QIP is happening in things like

where we hold shares at this point of time. The new gig economy is where you got to focus. Whether it is newer IPOs or the older companies in the new gig economy that is where you got to focus. Companies are pivoting. One needs to go whole hog here. India is underinvested in this sector by and large. We do not have too many IT companies. We do not have Netflix. We do not have Roku or anything of the kind.

So forget the old economy stocks. They will do okay. Cement yes. It is good for institutions, I am not a great buyer. Go for the new gig economy because you are going to make money there because these are entrepreneurs who are willing to raise capital, have no debt and do M&As. This year there will be a number of IPOs.

You better be in these companies. Allocate say 33% to the new gig economy companies. That is what I want to do and stick to that plan. A lot of them are unknown. It is very limited visibility for most of these companies, which is quite strange because they are the big value creators. The new gig economy stocks are where you got to focus. As for the metal story, we have got enough on our plate. We do not want to buy more at this point of time. Odd stories do keep coming or as I said who would have thought I would have bought a fashion wear company.

We also want to hear about the unheard of names of these new gig economy companies?
Unheard is a wrong word but most people don’t know about these stocks. We have been holding IndiaMart for a long time. This guy is not on the front pages, but he just raised this QIP at Rs 8,600 but is still largely ignored in the market. Then there is OnMobile, it went down to Rs 26, Rs 30 a share. The founder was a pioneer in the mobile phone products in the country. It is a good profitable company going a begging and now it has gone up to Rs 100 or so. There is Affle which has got strong AI capabilities in telephone and mobile phone industry and it has gone a begging. JustDial was the only profitable new gig company and its valuation was Rs 2,500 crore! It is absolutely ridiculous given what the assets were on the ground. It has gone up a little bit.

I am not saying buy any of these stocks but since you asked, all these stocks were there. But we focussed too much on the old economy. The economy is changing, the world is changing, let us give credence to the new economy, take your money and park it there. We believe one-third of the listed companies in India will be absolutely gone in the next five years. We can share the list with you, we have got a list made internally, 33% of the companies will be bankrupt and delisted in the next five years from BSE. It is about 800 companies.

Get out of them and get into the new companies, healthcare companies, IT companies. It is a new world out there. It is so exciting I cannot believe it. I do not want to be old. I want to restart my life now.



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UK – Deliveroo riders strike over pay, gig work conditions (Associated Press)

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08 April 2021

Riders for the meal delivery work services platform Deliveroo held a strike in London yesterday over pay and working conditions, part of a broader backlash against one of the UK’s biggest gig economy companies, reports the Associated Press. Socially distanced protests were also planned in York, Reading, Sheffield and Wolverhampton to demand fair pay, safety protections and basic workers’ rights. The Independent Workers’ Union of Great Britain, which represents migrant and gig workers, expected hundreds of riders to take part. Deliveroo said that “this small self-appointed union does not represent the vast majority of riders who tell us they value the total flexibility they enjoy.” Rider surveys found most are happy with the company and flexibility was their priority, the company said in a statement.

The strike coincides with the first day of unconditional share trading for Deliveroo, which went public last week in a debut that saw the company lose nearly 30% of their value. However, a number of institutional investors skipped the IPO, citing concerns about employment conditions for riders and a dual-class shareholder structure that gives founder Will Shu outsize control.

The company saw its business boom over the past year because of Covid-19 restrictions that powered demand for meal deliveries. Riders say they haven’t been sharing in the success because the company has been paying them less. Deliveroo and other gig companies in the UK that rely on flexible workforces are also facing looming regulatory challenges, after the Supreme Court recently ruled Uber drivers should be classed as “workers” and not self-employed, entitling them to benefits such as minimum wage and pensions.

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Winter Games gig tough job for French ice master

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Remy Boehler is just one step away from realizing his Olympic dream in China, as the French ice master has been invited to lead the Capital Gymnasium’s ice-making team in preparations for the Beijing 2022 Winter Games.

“Everything is good,” Boehler said before his team set the first ice surface transition underway during the “Experience Beijing” Ice Sports Testing Program running through April 10.

“Everybody has a lot of jobs for making good ice, and I think it’s a good point for preparing the Games,” added the 44-year-old, who said three years ago in PyeongChang 2018, his third Winter Games, that he’s quite willing to serve the next Olympics.

Like every previous Olympic Winter Games, the Beijing 2022 figure skating and short track speed skating competitions will be staged on the same rink in the 53-year-old Capital Gymnasium, which has been newly renovated.

From Boehler’s point of view, however, it’s not the same at all, since figure skaters need “softer” ice to better support jumps while short track speed skaters favor harder ice for increased speed.

To meet the requirement of both sports, Boehler and his team have to adjust the ice temperature from minus 3-4 degrees Celsius for figure skating to minus 6-7 degrees for short track.

“This is the only venue that has to switch between two sports in the middle of a day, which gives us huge stress during these testing events,” said Ding Dong, head of the Capital Gymnasium venue operation team, explaining why they arranged seven transitions in six testing days.

With the most recently updated Beijing 2022 schedule seeing both figure skating and short track events on one competition day, while the rest of the days have the two sports every other day, the challenges to the field of play transition are mounting.

“The transition involves many aspects around the rink, including the conversions of some temporary facilities, like the starting station and the protective pads. The photo positions will differ as well.

“But, ice is above every other thing. It’s also the most difficult part,” echoed Shen Ling, transition manager of the CG venue operation team.

As short track and figure skating won China the most gold medals at the Winter Games, the two sports have a solid fan base in the host country, possibly leading to a more complicated situation for Boehler’s team, seeing that the Capital Gymnasium will be often fully packed at Olympic time.

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New Chart Positions In Gig App Provider Ranking

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Unemployment claims are up one week, down the next in the topsy-turvy world after COVID-19. Where does that leave gig workers? In the driver’s seat, as this update to PYMNTS’ Provider Ranking of Gig Economy Apps tells us loud and clear.

Not only are there gigs, but it’s never been easier to pull up those postings on your smartphone and peruse them like a restaurant menu. Makes getting a gig a whole lot simpler. We’ve got a job, so get out the Ranking Machine for the Provider Ranking of Gig Economy Apps.

The Top Five

Our four top-ranked apps seem to have entrenched to some degree (although you never know).

Still at No. 1 is DoorDash, donating a million bucks to driver’s charities in April, followed as usual by Uber Driver at No. 2.

Instacart Shopper needs no assistance from customer service at its No. 3 spot — and for that matter, neither does the Fiverr freelance marketplace app, keeping busy at No. 4.

Now for a changeup to close out this section: Amazon Flex moves up one spot to enter the top 5 at No. 5.

The Top 10

At No. 6, we find the Upwork app down one chart position from last month, with self-explanatory app Freelancer also dropping one position to land at No. 7.

Rideshare legend Lyft likes preferred parking at No. 8, just where we left it last time.

Hare beats tortoise, as it were, as the TaskRabbit app jumps up a spot to No. 9, pushing the mighty Grubhub for Drivers to No. 10 and completing this edition of the Provider Ranking of Gig Economy Apps.

That’s what we call part of a full day’s work.

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NEW PYMNTS STUDY: OPEN BANKING 2021 

About The Study: Open banking-powered payment offerings have been available in some markets since 2018, but the pandemic drove many consumers to try these solutions for the first time — and there’s no going back. In the Open Banking Report, PYMNTS examines open banking’s rise as merchants and payment services providers worldwide tap into such options to offer secure, seamless account-to-account payments.



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