Sanjiv Bhasin, Director, IIFL Securities, says “there is a huge under-ownership of PSUs and this sector will gather steam. As a disclosure, we have both IRCON and IRFC in our portfolios. But please do not chase them. But replace some of your real estate stocks with largecap banks. I think ICICI Bank is going to see a 30% jump in market cap over the next three to six months.”
Last week was marred by HDFC Bank but it seems like ICICI Bank is going to pick up the flavour for banks.
Sanjiv Bhasin: After the biggest event of Ram temple inauguration and not to forget the Dow crossing 38,000, the pessimists and the people on the sideline waiting for corrections and talking of overvaluation, remain on the sideline. The midcap index hit an all-time high. REC, PFC, NBCC, GAIL, IREDA – look at the earnings and look at the numbers. They are expensive but inexpensive because there is no ownership. I was very flattered by the numbers of Colgate. Colgate is going to be the star for the FMCG. Now you watch Nestlé’s number. I still think that there are enough wheels to add to new highs. And I would be more bullish on the Bank Nifty, given that the PSU pack on earnings along with ICICI have been stellar. The underperformance of HDFC now gets neutralised. By the way, almost Rs 25,000 crore worth of HDFC stocks have been sold. Now, whether it is at a discount of 10% or not, who knows that you could see an expiry closer to 1600 on HDFC, given that most of the carnage is in? So extremely positive for the next three days and beyond. But let us watch for 21,850 being crossed and all the bears coming for covering.
Zee Entertainment, after all the flip-flops, has had a crash landing. The merger has been called off and the brokerages are warning that there is going to be nothing short of a free fall now for Zee Entertainment valuations and the question is what is going to happen now?
Sanjiv Bhasin: Yes, unfortunately this was coming and one had to gear up. But 61% of Zee is owned by mutual funds and LIC. So how can you have the largest shareholders do nothing? Now there are question marks on those independent shareholders, board of directors who did nothing for three years. So I think the Goenkas will be shunted out and that would be the best case of investor activism, which you are seeing.
I am very, very optimistic. Mukesh Ambani had put in a bid only to be second to Sony. And I think now there will be another buyer. The underlying business remains very robust. After Sony calling the merger off, we will see a lot of court battles and we will wait for that to play out.
What are your thoughts on the railway stocks because we were just discussing this a short while ago and looking at the mammoth move that we have witnessed in some of these rail stocks, is it advisable to jump on or have you missed the train completely?
Sanjiv Bhasin: That is what I am saying. The stock market is a glass half-full, half-empty. Do not look at the HDFC Banks of the world. Look at the broader market. NBCC, the rail stocks, REC, PFC, the list of PSUs hitting new highs is endless. Union Bank numbers, IREDA numbers that is where the money is being made. Unfortunately, that class was missing for mutual funds. And some of the large PMS said PSUs are untouchable, and so are technology stocks. Look at the earnings from Persistent, look at the earnings from Coforge. Not to forget SW Solar, it has been hitting three circuits. And for the right reason, as you just pointed out one crore solar panels to be installed. SW Solar is the lowest cost produced MEP player, mechanical engineering and plumbing. And it will be laughing its way.
I still think there is a huge under-ownership of PSUs that will gather steam. As a disclosure, we have both IRCON and IRFC in our portfolios. But please do not chase them. But replace some of your real estate stocks with largecap banks. I think ICICI Bank is going to see a 30% jump in market cap over the next three to six months.
Any fresh ideas within the realty pack or any beneficiaries?
Sanjiv Bhasin: No, like I have been warning you, stay away from real estate. I think they are fully priced. I would rather go on a quasi play. So I have been saying banks. I think small banks which trade less than one-time price to book, particularly in the space of part PSU, part private, like a Dhanlaxmi Bank, which we have identified as a disclosure that is in our personal portfolio, in our client. These could be stocks which can double. They have no large ownership. They are less than one and a half-two times in ownership by any percentage. And they have huge outflow as far as the business is going, whether it is gold loan, agri loan. It is one of the best banks from Kerala.
It’s a similar case with RBL when there was no promoter, more than 2% closer to Rs 100. Then we had the Mahindra’s buys. So I am very optimistic. I was very impressed with Colgate earnings. Indus Tower is my dark horse, which I have been telling you, that will be a big outperformer. Look for targets closer to 300 on Indus Tower.
