Pointing to India’s long history of failed carriers—from Sahara and Deccan to GoAir and Kingfisher—he said new entrants must be ready to invest “at least ₹5,000 to ₹10,000 crore upfront, suffer losses, and only then hope to establish themselves.” He does not expect meaningful new airline capacity or new players in the near term.
Sabharwal believes the recent correction in InterGlobe’s stock offers an attractive entry point. He stated, “These are good levels to buy InterGlobe. We also bought yesterday. The stock never corrected even when the broader market did, so this is an opportunity. Bad news in good companies is usually a good time to buy. In a week, no one will even be talking about the controversy, and people will continue flying with InterGlobe.”
He drew a sharp distinction between operational setbacks and deeper credibility issues, explaining why he is avoiding Kaynes Technology. According to him, “This is different from a corporate governance failure. In Kaynes, several governance questions have been raised, and much of its valuation is based on future businesses like semiconductors. Even established semiconductor players struggle to stabilise plants and achieve productivity because it is a very high operating-leverage industry. On last year’s earnings of around ₹45, the stock is still at nearly 90 times earnings, and after these disclosures, it’s unclear whether their earlier growth trajectory will continue.”
He added that retail ownership is now very high while institutional exposure is limited, which “reflects a lack of confidence among large investors.” He believes investors should wait for clarity from future results and management commentary.
Sabharwal also remains cautious on the broader EMS space. He said, “Current margins for most companies are just 2.5–3%. One client leaving or a single controversy can cause profits to collapse. Some high-flying names in this segment have already reported negative results, yet stocks still trade at 60 to 100 times earnings. I don’t see how that can be justified.”
On financials, he views ICICI Prudential AMC positively but with realistic expectations. “It is one of the best asset management franchises with a strong track record,” he said. “Most of its AUM is actively managed, which deserves higher valuation. But at around 9% of AUM, the valuation is on the higher side for an AMC. Historically, AMCs were valued at about 6%. It will be a good long-term wealth creator, but near-term performance may be muted.” Discussing infrastructure, Sabharwal noted that the past year brought execution challenges due to elections, delayed payments, and unusually severe monsoons. He prefers larger players with stronger track records: “We own NCC and Ahluwalia Contracts. I expect execution to improve sharply over the next few quarters, and valuations remain inexpensive relative to history.”
In allied sectors, he expects paints to recover but remains cautious on cement. “Paints should do well. The worst of the impact from Opus entering the market seems to be behind us, and Asian Paints has indicated that growth is returning. But cement requires more caution. Prices are still under pressure even in the peak construction season, supply growth has outpaced demand, and margin gains have come mainly from cost control—which may not continue. Seasonal price improvement hasn’t happened this year. While long-term prospects are good, valuations are expensive compared to historical levels.”
