Reliance is a true FOMO stock where one can invest on faith: Ajay Srivasta

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“One cannot ignore a core story out of India. People ignored the Adani Group companies’ infrastructure and paid a heavy price by losing returns from the best performing set of companies. One may argue the valuations but that is what it is, life is all about that. I think Reliance is one story we cannot ignore,” says Ajay Srivastava, CEO, Dimensions Corporate Finance Services.

Reliance Industries has made a comeback. It was the stock of the year in 2020. The leadership is now changing. What do you make of that?
Reliance is a true FOMO stock for most investors. You love it or hate it but you cannot leave it on the table. It comes to haunt you. I think it is a good story. One does not know how to value a holding company at this point of time because once they get listed, what is the holding company discount going to be? It has got so many moving parts that one has to decide how to value that company. This is one company where one just invests on faith in the promoter, believing that he is going to keep on giving you value, more than trying to analyse it. Is it expensive at Rs 2,800? Perhaps. But will we get it at Rs 2,600? We may still get it at Rs 2,600 or maybe Rs 2,500. What should you do?

I think the only thing you can do is to keep adding up if price goes down. One cannot ignore a core story out of India. People ignored the Adani Group companies’ infrastructure and paid a heavy price by losing returns from the best performing set of companies. One may argue the valuations but that is what it is, life is all about that. I think Reliance is one story we cannot ignore.

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Secondly, it is a dynamic story. They are doing new things every year. Not everything will make money but they are doing new things. It is not static like a Bajaj Auto which is sitting on its cash files and doing nothing about it. What a company like Bajaj Auto does and what Reliance does makes an amazing comparison.

Reliance puts its cash to use. Bajaj Auto puts its cash in FDs. Now you can decide whether you want to be with the guy who puts in FDs or a guy who puts new things on the table. Yes he will take ambitious bets, yes there will be corrections but I think this is one stock one needs to buy on correction and not sell on correction. So do not analyse it. Nobody has been able to analyse the valuation of this stock. What is the holding company discount going to be? I think just have faith and invest with faith.

You always say create a FOMO basket, see how it performs when it goes down on the decline. What else is there these days in your FOMO basket besides RIL? Any of the Adani Group stocks?
Yes, certainly. I sold out Adani Enterprises and to my chagrin. I found that it is the worst investment decision I ever made. I could not find that logic to keep on holding. I made decent money but I could not find the logic but teh market found a new logic. I think we have missed the bus on the coal which will come out of Australia and perhaps that is driving the stock.

But the fact remains that sometimes one makes a good decision and sometimes a bad decision. But in life, if we can still afford a holiday, I think we have done well for our lives.