Where do you think the insurance sector is moving forward? Which one is your biggest favorite?
Deven Choksey: Private sector companies are thriving in product innovation, while at the same time thriving with high value added products, adopting a digital approach when expanding the market. The cost of acquiring customers remains relatively low in that case. Given that situation, I think they deserve the premium ranks they are now. The embedded values ​​of EBITDA and EBITDA ratios we see in life insurance remain comfortable high for some private insurers compared to LIC.
In my view, growth momentum is expected to continue for several reasons. For one, new income tax exemptions have begun this fiscal year, and the tax rate is unlikely to apply until the income amount reaches Rs 12,000, where the more surplus remains in the hands of individuals, the more likely it is to find its way in some of the financial instruments, including life insurance.
In this scenario, private sector companies also remain relatively advantageous from a growth perspective due to the fact that their bases are giving them advantages at this point. Would you like to buy it immediately? The answer is yes, both. On the evaluation side, some of them have already begun scaling up. It could be good, like SBI, HDFC Life, Bajaj Life Insurance Business. We like those businesses from an investment perspective.
How about the pharmasector? It is steadily gaining market momentum, but I don’t think the market is taking into account the big tariff overhangs in Pharma. What are you making this space?
Deven Choksey: That certainly remains uncertain. But putting that aside, do Indian companies strategize their existence all over the world? On the one hand, they draw out specialized generics, complex generics, where several of the larger companies, such as Sun Pharma, Cipla, and Dr Reddy’s, have registered their existence. Complex generic drugs give the advantages of pricing power.
As far as the price of this particular drug is concerned, they are not competing with pure generics, so it is positive for them, and most of these companies are expanding their portfolios on that side.
The second positive is API business. This is once again being comfortably integrated into the pharmaceutical business, with some global peers, major pharma companies and once again Indian companies including Divi, Laurus and even other majors. Finally, on the margin front, most of these pharmaceutical companies have seen better margins for this fiscal year over the past few years, as input cost scenarios have improved. So despite the turbulence of tariffs, we are clearly confident about our future outlook. If that doesn’t get in the way, some of these companies could be valued.
