Despite the rally in stock prices, investors should be cautious about railway companies' stocks even as defence sector stocks are a good option, according to Sameer Arora.
Railway companies in India have a history of not being paid on time by governments, thereby impacting their growth, according to Helios Capital's Samir Arora.
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Sometimes, the government changes or they also cancel orders given to railway companies by the previous government, Arora, founder and fund manager at Helios Capital, told BQ Prime's Niraj Shah.
"We are improving in many things but that doesn't change the way a government pays its contractors," he said.
"There is enough to beat the market by 5-7% per annum, but if you are trying to beat the market by 20% per annum, then in the bad phase, you will be beaten by 10%," Arora said.
However, defence companies are different, he said. In terms of government-owned defence companies, the government knows that it is not just an order but a strategic move, according to him.
He highlighted that the government's push to become self-reliant and the changed world order, with countries moving to ramp up defence capabilities, has also helped defence companies.
Governments were anyway spending money by importing, he said. They are now substituting and giving orders to domestic companies, he said.
Arora is constructive on Zomato Ltd. because it is hard to copy the "many to many" model, implying providing services to various customers through several delivery partners.
"It is not a tech company, it is (a) logistics company. It needs so much coordination to keep everyone happy. It cannot be done easily," he said.
Watch the full interview here:
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