Sanjiv Bhasin, Director, IIFL Securities, says: “We have been very bullish on auto, select metals. One can take some chips off there. Banks, speciality chemicals is something which we have been recommending as a contrarian play and they have done well. So, you can shift or rotate your money. I am not saying totally exit, but keeping some cash in case there is a correction, which is much on the cards; that would be a good strategy.”

Bhasin further says Sensex could touch 100,000 in another 12-18 months. He recommends taking some money off Hindalco and Tata Steel and putting that money into Vedanta. Further, he says, UltraTech is the top pick in cement along with Dalmia Bharat and ACC and Ambuja.

75,000 was a big mark that we have managed to scale on Sensex. The next question is what about that one lakh mark on the Sensex? When do you think is that likely to happen?
Sanjiv Bhasin: I wish I knew. At this rate, who knows how fast it comes? But take it with a pinch of salt. We are fully priced now. A large part of the global macros, the demographic premium, the input of SIPs is all played out. So, first there should be some healthy correction in the market before the election and only then will we scale higher. We need earnings to catch up.

Unlock Leadership Excellence with a Range of CXO Courses

Offering College Course Website
IIM Lucknow IIML Chief Executive Officer Programme Visit
Indian School of Business ISB Chief Technology Officer Visit
IIM Kozhikode IIMK Chief Product Officer Programme Visit

I would say 85,000 is coming by the end of the year, but it may be a year, year-and-a-half before we get to that one lakh number. These are very attractive numbers and now everyone is gung-ho, but this is the time to be a little cautious and take some money off the table. Simply put, because one, inflation is rising, oil is up and we know that the rate cut in the US is now being prolonged. Along with that, I would say earnings season is fully priced as far as the positives. Any negative surprise could be dealt with a little harshly. Taking some money off the table right now is a good move. We are in a festive mood and 75,000 could be a very sweet benchmark, which may remain for some time.

Is it time to book some bit of profit? Will you wait for earnings season to end or is there some different play that you are looking at right now if someone is looking to enter or would you just avoid and sit with cash?
Sanjiv Bhasin: It is a glass half-full, half-empty. Most people on the sideline have realised that the money from fixed deposits is going into mutual funds and that is a phenomenon which may continue for some time. Right now, it is the feeling of missing out (FOMO), which means that any and everyone wants a part of the pie of equity or a SIP and that is why you are seeing record inflows into mutual funds. It is not the time to wait for results. It is always good to leave something on the table before taking your money off.

We have been very bullish on auto, select metals. One can take some chips off there. Banks, speciality chemicals is something which we have been recommending as a contrarian play and they have done well. So, you can shift or rotate your money. I am not saying totally exit, but keeping some cash in case there is a correction, which is much on the cards; that would be a good strategy.

You talked about the metals pack. Vedanta, firing away today, was one of those candidates that had underperformed. We have other names like NMDC on fire as well. What within metals is something that you would take the money off and where would you invest if you had to within metals?
Sanjiv Bhasin: Vedanta has been one of our clear picks. It has been a 33% up performer. Nalco, which we recommended very strongly, is up to new highs, so is SAIL. In select pockets like Tata Steel and Hindalco, you could take some money off. In the case of Hindalco, the upfront capex which they announced for their Novelis play could be a little bit drag on earnings. So, Hindalco and Tata Steel are two which we would recommend to take some money off. We would put that money back into Vedanta.

We think Vedanta simply put is the best play you have on the total non-ferrous play. So, even people do not realise that it is the only nickel producer in the country. Along with that, Hindustan Zinc is the best proxy for silver. They have got 2400 megawatts of power, they have got coal, they have got everything possible. So, Vedanta is still a very undervalued stock.

On the other hand, the specialty chemical plays are looking extremely good. SRF, UPL which has been one of my top picks and I think that these two could be very good players. We also like Indiabulls Real Estate where you have seen a new capital infusion of 4,000 crore commitment by the promoters and very-very marquee names. Once we get through the merger talk, which is expected on the 24th of April, this stock could see a strong re-rating. At a time when DLF is at Rs 2.3 lakh crore market cap, this is just a paltry 7,000 crore despite having land revenues which are equal in scale to large builders, particularly in Maharashtra and in NCR.Zomato today managed to touch the Rs 200 mark. The runup in Zomato is not stopping. Now, Invesco has upgraded the valuation for Swiggy. How interesting is this play?
Sanjiv Bhasin: So that is the uncanny part about bull markets. Everyone hates it. Hated it at Rs 40-50 and at 200, you love it. So, chase the momentum is the perfect cadre for whatever way you want to upgrade it. At 200, there is not much scope on the upside. Even the Blinkit part is getting fully priced. Now, we as a disclosure had Zomato, PB Fintech and Paytm, all three picks. Paytm definitely disappointed. We lost money there, but we made it up. PB Fintech has more than doubled and Zomato is up four times. So, not complaining.

But all I am saying is that in the frenzy, do not get caught up in the momentum. Buy some now, but wait for corrections. Entering at this price just because of an upgrade of another peer group company is a little bit problematic. I would say that the brick and mortar companies, particularly cement, steel are still giving more opportunity and where earnings visibility is much more clear. As a disclosure, we thought that the Blinkit buy when everyone was downgrading was a very good opportunity and now we are fully pricing in most of the positives. So, we are not advocating to go whole hog. Put some money but be prepared to see a sharper than expected correction in the next fortnight.

You are positive on cement. Give me some top picks within that sector. Also, you talked about PB Fintech. They have been doing these fresh partnerships with the ICICI Lombard, etc. Is that also fully priced in now at current valuations?
Sanjiv Bhasin: That is a difficult question. It was Rs 750 when we put in our money and it has doubled. I cannot advocate buying more. It is a very-very sweet play on the insurance space and the tie-ups they are doing. Their Paisabazaar is doing extremely well. So, I do not rule out more upside. But like I said, right now in momentum, everything is being chased. See where your valuation comfort is there, only then you should delve into that.

On the other hand, on the cement plays. I think UltraTech is the most undervalued stock, even though it has scaled Rs 10,500. You should put your money there. Simply put, 154 million tonnes of capacity and price is now going to rise. I would also advocate a buy on Dalmia Bharat and both the ACC and Ambuja combined.

If you add four of these, you are getting almost 53% of the market share of cement and cement prices generally now start to do well just before the monsoon because there is a lot of construction activity as far as roads, ports, commercial and residential. So, UltraTech is our top pick along with Dalmia Bharat and ACC and Ambuja, you could add some more here.


Source link