NSE IPO to create significant value for investors; Tata Motors a strong long-term bet: Dipan Mehta

The proposed initial public offering (IPO) of the National Stock Exchange (NSE) is set to be one of the most significant events for India's capital markets, according to Dipan Mehta, Director, Elixir Equities.

Speaking to ET Now, Mehta said the long-awaited listing would bring greater transparency to the valuation of NSE shares while creating an important wealth-unlocking opportunity for existing investors.Mehta noted that investors who purchased NSE shares in the unlisted market would finally have access to proper price discovery once the company goes public.

"It is a very important event which we have been waiting for a long, long time... investors... may get a proper valuation," he said.

He added that the listing would be a positive development for the broader market, saying, "On the whole, it is a great development.

And NSE should go ahead and create considerable value for investors."Describing NSE as a compelling investment opportunity, Mehta said the exchange deserves to be viewed alongside other listed financial services businesses.

"It is one of the best fintech plays... the stock could be pretty attractive," he remarked.

At the same time, he cautioned that investors should keep in mind the possibility of earnings volatility arising from regulatory changes, particularly those related to options trading.While declining to comment on opportunities in the unlisted or grey market, Mehta said the IPO would provide significant value unlocking for existing shareholders by enabling transparent trading.

"It is a great value-unlocking opportunity for investors who invested in the pre-IPO stage," he said, adding that a public listing would also improve liquidity and price discovery.On the automobile sector, Mehta advised investors to adopt a cautious approach, pointing to multiple headwinds facing the industry.

"I think that in autos one should get a bit cautious," he said.

According to him, delayed monsoons, fading base effects, rising input costs and the industry's gradual shift towards electric vehicles could weigh on profitability.

"There could be pressure on operating profit margins... many, many headwinds over there," he observed.Despite the sharp correction in Tata Motors following weaker-than-expected margin guidance from Jaguar Land Rover (JLR), Mehta remains optimistic about the company's long-term prospects.

"On a longer-term basis, Tata Motors can be a great value creator," he said, noting that JLR's strong product pipeline and electric vehicle strategy should support future growth.

He believes improving earnings visibility is only a matter of time, saying, "It is just a matter of time before they get... the predictability of earnings."Mehta also highlighted attractive valuations, favourable currency movements and the improving performance of Tata Motors' domestic passenger vehicle business as additional positives.

For investors with a long investment horizon, he believes the stock continues to offer meaningful upside.

"If you have the longer-term view...

Tata Motors... can certainly deliver good returns," he said. ...