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I was reading a brokerage note which says that the market is extremely expensive. There is only greed on the street, no signs of fear. You are someone who always says that you got to take the market the way it is, not the way you would like it to be. Otherwise, you will be sitting right on the side. How are you feeling at looking at the market right now? Thank God it is Friday, but it went to 21,200, came back to almost 22,000.
Sanjiv Bhasin: Greed and fear is in the eyes of the beholder, nobody can believe that HP, BP, IOC have more than doubled and keep on rising, and State Bank is at Rs 760! So the fence sitters will say this is an expensive market, we want a correction, we will get in. If corrections came because you want to buy, then they will not come. Till those guys who are out of the market will not get sucked in, the market may not be able to give a meaningful correction.
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As it is, we have seen that the correction last for some time. But look at the change of ownership. HDFC Bank lagged for one month and Reliance made up that differential. The other stocks which are outperforming have been IT and pharma quietly hitting new highs. I still think stock specific you can see upside. But to classify that the market is cheap will not be in the right mode. However, I reiterate that this is a global liquidity rally. And if you keep watching the Fed inflation numbers, the macros and become an economist, you will not make money.
So stay invested, look for good stocks which are giving you value and stay in them. Because there is no perfect mantra, we will see a correction when it comes and we will wait for that. But right now all the macro micro economic data seem to be in a very sweet spot. Look at how PSUs have performed. The proof of the pudding is only for those who are holding it. And people who shun PSUs and stay away are now talking about a big correction and over valuation in PSUs, which is normal.
Which part of the PSU is your favourite right now? You have been riding PSUs in parts for some time now. But there is such a huge list of categories right; banks, railways, power, this, that. Which part has got the most juice right now, in your view? Banks?
Sanjiv Bhasin: So three specific stocks. ONGC is one stock which has hardly been re-rated. And it is the most under-owned stock as far as ownership goes. If we are talking of energy, then ONGC has to be on your list, irrespective of 270 or 280 or 260.
Second is again IOC. I am very optimistic on IOC. Again, I have been bullish on it from 9500, 110 at 180, you take your call or 190. Concor and IRCTC are two more plays. And last but not least, Nalco. You can add Hudco and NBCC, which we own from much lower levels. It is difficult to come out and see. The disparity is that some of these stocks have been huge outperformers. To come and stick out to a stock which is up three times is very difficult. But the uncanny part is that REC, PFC have only got higher in the last two years and if you miss the initial part of the rally, there is no harm in joining in. This goes back to Warren Buffett, who did not understand technology and stayed away. But in 2016, when he understood Apple, he put big money after it. When you put big money, 50 million is up five times in the last six years. So it is, like I said, the value lies in your estimates, in your eyes. You have to see where you can put your money. There are no free lunches now with stocks having rallied the way they are. We are seeing value in some other sector stocks in similar trends. And we would be more optimistic or bullish on those.
Which ones are those? Which are those sectors, the kind of optimistic trends that you are seeing? Where is that?
Sanjiv Bhasin: If I can take the biggest wealth creator in the last one year, it has to be GQG Capital and Rajiv Jain. When he bought Adani, nobody was thinking of buying and there was all the talk of debt overhang. Now his latest baby is Vedanta. Anil Agarwal has been under cloud because of debt and merging some of his businesses in one. Now that may have been in parlance with his corporate strategy, but you cannot have Cairn, Sesa Goa, aluminium, zinc, bauxite, silver, copper, all of them put together and to add to that, he has 4,790 megawatts of power. He also has bauxite with BALCO. He also has Hindustan Zinc. 36% is the dividend yield in Vedanta. And now GQG is buying, say, a billion dollars.
So, do your legwork, but this stock should be Rs 400. If GQG Capital has the Midas touch, then his stocks do not double, they triple in one year. I am looking at something like Rs 550-560 coming in the next one year. And if Yes Bank is now Rs 1 lakh crore, then at Rs 99,000 crore, Vedanta has enough assets to be at least double the size.
Also, their debt reduction is in stream. They are the third on the S&P index of ESG. And the biggest icing on the cake, mind you, will be this Tuticorin copper opening. It used to contribute 40% of India’s copper needs and the Supreme Court taking a big verdict. This stock can start to be rerated from day one. As a disclosure, we have Vedanta in our portfolio. We are adding and Vedanta can be the stock of this year.
I am also very optimistic on Devyani at Rs 150. The food chain, the QSR, has seen the worst behind it. At Rs 150, put your money where your mouth is. That is one stock which can outperform.
I was just in Kolkata two days back. And from my interaction from someone in Bandhan Bank, they said their account openings is now 3.3 crores. And yes, there has been a cloud on some of the old non collateral loans, but that is all written down. There is no such thing. Now, to manage 3.2, 3.3 crore accounts and growing at 15 lakh a month, there will be a little bit of discrepancies which any rating agency can come up with. But if I said, at sub 200, at a time when their interest spreads are at the best, Bandhan is one stock you should own in your portfolio and leave for the next two-three quarters. This can be a doubler, maybe in the next one-one and a half year.
Are you smiling ear to ear with the way M&M panned out in yesterday’s trade? It is not a synchronised move within the entire auto basket. It has been some select commentary on M&M and that has led to that stock going up 6.5% yesterday, your views?
Sanjiv Bhasin: Yes, I am smiling from cheek to cheek. You should also because two days back when all the channels were talking of oil, the debacle on Dow, macro numbers, they became economists from anchors. That is the time you should buy and I bought the fear and you saw what happened. Nalco was up 14%, State Bank 6% and raring to go. And UPL also joined in the rally. M&M numbers were a beat by far.
Now that the tractor division has been underperforming, but the SUV market is roaring. So, I think there was a much needed consolidation in M&M, but that stock is headed higher. And like I pointed out two days back, HDFC has bottomed out for the year. Read my lips, you will not get this bank. Hear the language. The mortgage business has seen the highest growth in the last quarter. There has been equalisation of the merger.
HDFC now becomes the best buy to be in your portfolio. Yes, it may underperform for a quarter or so because of the over ownership and every dumb foreign portfolio investor and Indian money mutual fund having most of his eggs there. They have let go of that. Now is the time to put your money where your mouth is. So, M&M and HDFC bank are two stocks which will power your way to create wealth. Slow but sure, but you are in pedigree names.
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