Sanjiv Bhasin, Director, IIFL Securities, says we are adding Hindustan Lever. For HUL, Rs 2,350 would be my short-term target, but I think it is headed back to Rs 2,450. Keep a stop loss of Rs 2,170. If the index has to move back, FMCG has to be a key. This is a very-very sweet spot which they are getting into. Second bet would be Bata. The short-term target is closer to Rs 1,500; but I do not rule out Rs 1,700 coming in the slightly longer term. Lastly, ICICI Bank. Among largecap banks, ICICI is leading from the front.”
Let us start with all that is going on within the telecom space – be it Vodafone Idea FPO and also the Jio platform mulling listing. What does that do to the entire space?
Sanjiv Bhasin: I have been of the view that the follow-on public offering (FPO) must be subscribed to. It will be difficult for me to comment on that as under compliance, but I think we are in for very good times as far as telecom and data usage go. The biggest positive would be the increase in ARPU on rising rates. For me to give a call now on the stock would be difficult as it comes under compliance.
What about Zee Entertainment? Do you track that one closely because there is a lot of news flow over the last couple of days, right from the rejig at the top level to the fact that they have withdrawn the merger application from NCLT. The stock is getting out of the F&O as well.
Sanjiv Bhasin: A disclosure, we exited both Zee and Paytm last month. We felt that we are on a losing wicket and it was a very difficult experience because for two years, Zee led everyone up the lane, creditors, debtors, investors, and in the end it turned out to be just a hoax on the merger. 3% of holding with the Goenkas and they are holding the whole huge merger and shareholders to ransom. I think the sooner that stock the better it is because there seems to be nothing on the anvil and this is only getting murkier as the day progresses.
Unfortunately, we had a view which changed after the merger fell through and something we possibly thought could have turned out to change the dynamics of Indian media has turned out to be a really sour spot. SEBI should look deeply into this. There are winners and losers. This unfortunately is one of our losing picks.
Elon Musk is going to visit India. There is a lot of buzz around which players he could align with. How are you looking at the overall landscape of different spaces that he could enter and what it could potentially mean for the existing players?Sanjiv Bhasin: First of all, it puts India in the global forefront as far as business activity goes. You have to be present in India and it is now highlighting what Tesla also sees India as a big market space. Aside from that, the Starlink exposure could be a huge game changer on the satellite front.
We know Tata Communications is one of the biggest players as far as the cable and the network goes, that will be one of the big ones because it comes from the house of Tatas. But I think there will be some big names like the Tatas which will be in the forefront with Elon Musk on a lot of things related to EVs, related to satellites. There is a lot of excitement. Now, which company benefits, we will only know in hindsight.
But it definitely tells us that maybe we are past this correction which was there for whatever reasons and now the Nifty looks poised to regain 22,500, 22600. So, largecaps should be the biggest beneficiaries as we plough back and metals and commodities are leading. But Elon Musk’s visit is not just symbolic, it is a showcase of the potential of what our economy holds for investing after China plus one will be even bigger icing on the cake.
What is your take on the entire cement sector? Given that we are looking at these price hikes, a lot of the cement prices have remained largely unchanged. What is your outlook in terms of some of the companies gaining market share and how things are shape up within the entire cement space? What do you like here?
Sanjiv Bhasin: As you are aware, 53% of the market is with five players and I continue to think that of the 140 million tonnes, the next two combined make 60 million tonnes, that is UltraTech on 140, ACC, Ambuja on the other side. Actually, Adanis have increased their stake and now own 70% in Ambuja. So, I am very positive about this space. Cement is a no-brainer and we continue to be with the large players, UltraTech, ACC, Ambuja and Dalmia Bharat.
Dalmia Bharat could be a dark horse because of their cost efficiency and their whole network as far as the coal input, that is very well played and they have a very sweet spot in the regions which they surface. So, this is a very good time for construction because as the heat plays out, activity increases because it dries faster and these top three-four names should be the market leaders, outperformers.
Talk to us about what looks good right now in terms of the stock recommendations.
Sanjiv Bhasin: I took a contrarian bet a couple of days back and I gave a disclosure, we are adding Hindustan Lever. The stock corrected all the way from 2800. At 2190, 2200 we think this stock has got multiple supports and this is like a yearly breakout. We think the underlying premium now on rural income growth, particularly from the government spending, pre and post-election, fall in input costs, all that bodes well for Hindustan Lever. You cannot have the largest FMCG player not participate. For HUL, Rs 2,350 would be my short-term target, but I think it is headed back to Rs 2,450. Keep a stop loss of Rs 2,170. If the index has to move back, FMCG has to be a key. This is a very-very sweet spot which they are getting into.
Second would be Bata. Footwear is a no-brainer in the sense that change in aspiration, growth, and need for new footwear will see the jump from the smaller names like Campus and unregulated into Bata. Bata’s franchise outlet as far as contract manufacturing is playing out and Bata is now poised for a short term target closer to Rs 1,500; but I do not rule out Rs 1,700 coming in the slightly longer term, pedigree stock which you must own.
Lastly, ICICI Bank. Among largecap banks, ICICI is leading from the front. The numbers are due on April 27. It will be the best ever quarter because their CASA ratio and NIMs would be arguably in a very sweet spot, plus their NPAs have declined and in the order book they are seeing the best-ever credit offtake and I am also bullish now on the market after this reasonable correction which I had given you a call on last week that we will fall closer to 22,000.
So, these three bets would actually make you money in the near term and in the medium term.
