Brokerages have started to align themselves to the opportunity they see in SBI, while markets are gradually warming to it. How bullish would you be on the banking majors?
We are bullish on Dr Lal Pathlabs (we put our money in it at Rs 1,600) because we think they will make money hand over fist. We are very bullish on Page Industries. It has been our top pick from Rs 16,000-17,000; State Bank has been our favourite since it was at Rs 175 and all the FIIs were dumping it. We still think State Bank has value but do not get sucked in by the reports because with Nifty at 15500 or Bank Nifty at 37000 leave no room for error. The dollar is coming back and we are overweight on the defensives like IT and pharma. Banks are in a very sweet spot on the industrial recovery but we will take it with a pinch of salt. We are not going to chase State Bank at Rs 410. It is in our portfolio. The next two weeks may see a dip in the market because of a stronger dollar and IT and pharma are going to be the real kingpins going into the next six months.
How are you looking at Bharti acquiring Warburg Pincus’s stake in its DTH arm? How are you viewing this development?
Two weeks back when Bharti’s numbers came, everyone was gung-ho about the stock at Rs 620. I stuck my neck out and said this is the time to replace Bharti with Reliance. Reliance was Rs 1,900. We did this swap when Reliance was Rs 2,300 and Bharti was Rs 425. I am very overweight on Reliance. Jio is going to gain market share. Bharti may be a reasonable performer but now they are getting into the ambit of trying to become a Jio where cash which they have raised for other purposes is going to go as a payout. I would be cautious on Bharti. Like I said, our swap has taken place, we replaced Bharti closer to Rs 600 and got into Reliance at Rs 1,900. We are still sticking with Jio. There is near-term weakness in Reliance. The profit booking may be over and if this index has to go higher, then Reliance has to lead it from there.
Post Budget, which are the two or three midcap stocks you are advising your clients to buy?
It is actually a mix of midcaps and large caps. I can suggest five names.
has been my top pick from Rs 50. The CV cycle and the recovery in buses is going to be huge. As a caveat, we have been long on Rs 50 and so at Rs 130, the justification became difficult. But do a SIP because CV cycles can help Tata Motors and Ashok Leyland.
Second would be Bandhan Bank. A lot of water has flown under the bridge and we think that Bandhan Bank with 2.25 crore account holders is poised to seize the market. The risk-reward at Rs 300-320 is very favourable.
Third would be Lupin. Obamacare is back with a bang. Lupin, Sun are going to gain market share in the generic market. I can see a 50% upside in both these large caps.
Fourth would be Maruti. Every second car being sold is a Maruti and we are looking at a huge upside.
The last one would be Godrej Properties. It is now the largest market player and with no debt or overhang, they raised money at a much lower rate so they are secluded from that and raising growth capital for expansion now means that from lease model their ownership model at a time when REIT real estate is going to be the star for this year. So I can see at least a 50% upside in all these six counters which I have mentioned.
