Expert Advice: Approach with Caution on InterGlobe Aviation, Kaynes Technology, and Quick Commerce Stocks

Market Expert Deven Choksey Advises Caution

Market expert Deven Choksey, Managing Director at DRChoksey Finserv, has advised investors to take a 'wait-and-see' approach on InterGlobe Aviation and Kaynes Technology shares due to significant uncertainties surrounding these companies.

InterGlobe Aviation: Uncertainties Ahead

Regarding InterGlobe Aviation, Choksey highlighted several factors that make it difficult to predict the company's performance. These include recent quarterly losses and uncertainty surrounding a potential penalty. The company's stock has fallen 20% from its peak, and Choksey believes that the worst is still probably not over.

Choksey noted that the company may be able to charge premium prices on its exclusive feeder routes, but a potential 10% loss in market share on main routes presents a significant challenge. He is withholding a definitive view until there is more clarity on the company's revenue and cost structure.

Kaynes Technology: Accounting Error Uncertainty

Turning to Kaynes Technology, Choksey remained wary due to an accounting error that has not yet been quantified. The company's stock experienced a sharp price drop, followed by a 13% recovery, but Choksey warned that this is not going to be taken very easy by investors.

He suggested that if the profit picture is marred for one or two quarters, the premium valuation of the stock could be at risk, leaving little margin of safety for investors. As a result, Choksey advises investors to wait and watch for some time.

Quick Commerce Sector: Unsustainable Cash Burn

Choksey also analyzed the quick commerce space, including players like Meesho, Swiggy, and Blinkit. He argued that Meesho's business model is missing a competitive moat, as it relies on advertising for revenue rather than charging commissions.

Choksey agreed that the current level of cash burn in the quick commerce sector is unsustainable. He cautioned investors to be mindful, stating that while gaining market share is one aspect, achieving profitability is paramount. Today, at the market cap valuation that you see for these companies, they are richly priced, Choksey observed.

• Choksey calculated that justifying these valuations would require significant profit generation, which he does not foresee in the next three years.
• He concluded with a memorable piece of advice for investors: As a consumer, you enjoy their services, but not as investors.

Overall, Choksey's advice is to approach these stocks with caution and wait for more clarity on their revenue and cost structures before making any investment decisions.