Sanjiv Bhasin, Director, IIFL Securities, says “put all your effort in Idea. You are getting an opportunity for a large IPO where allotment will be more or less in a very good ratio. So, Idea is the top pick. Besides that, silver prices with heading higher, we have been very bullish on Vedanta and that has been a huge outperformer. I see Rs 450 coming on Vedanta. I am also very bullish on Maruti where Rs 13,500 could come by the earnings Lastly, Indiabulls Real Estate, which for me will again be the stock of the year.”
I guess all eyes are on HDFC Bank. There was no dhamaka in the earnings. What do you think the stock is going to do now?
Sanjiv Bhasin: HDFC Bank was the star which pulled out of the throes of 21,800-21,777 and I think that numbers were in line. One cannot make a spectacular case because they have clearly indicated the CDR ratio is on its way down and it will take a couple of quarters. What you have to give them credit for is that they are adjusting one of the largest mortgage lenders into the book and it takes a couple of quarters. I think, like you said, the stock will do nothing much. It is not going to see much downside because they have indicated that we know deposits are on the weaker side and that is across the board.
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As the liability franchise improves, as we see more colours on the NIMs expanding because they have not raised rates just to protect their margins. Soin-line numbers, in-line performance, that is what the idea is. If you get it on a decline, it is a buy for me.
What about Reliance Industries? Of course, we were expecting the numbers to coincide with Elon Musk\’s visit which has now been postponed. So, maybe some announcement on that front. But overall, what are you expecting from numbers?
Sanjiv Bhasin: For me, today belongs to Vodafone Idea. This FPO is the only opportunity to get the stock at Rs 11. This is going to be the stock of the year. One year target is Rs 25. People are misreading the debt and everything is overblown. There is just an outstanding of something like Rs 3,800 crore towards banks. Majority of the debt has been converted into equity on interest because of the government taking stake and the government is also very gung-ho that they are in the way of raising funds which is going to give capital for 5G and the others.
For me, the stock of the day, stock of the month, stock of the year and the next two years is Idea Voda. You cannot but make money, so put all your money at Rs 11, you cannot but be successful. That is my top pick.
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Coming to Reliance, the numbers will be reasonably good. ARPUs are going to see an upside. By the way, Voda’s ARPUs came at Rs 142 last quarter, which over the next two quarters can even go up to Rs 180, 190 which will again be a big cushion. We will watch out for Jio\’s earnings. We will watch out for the ARPU which is very positive.
Thirdly, if we look at their retail and energy arms, the numbers from SW Solar, which is largely owned by Reliance Energy, the sum of parts could make us pleasantly confident of Reliance outperformance. However, the problem is going to be more on the OTC side where we have seen a fluctuation in oil prices which can be seen as some pressure on the margin. But overall, I would say inline numbers.
What else within mid and smallcaps are you recommending right now to buy?
Sanjiv Bhasin: Investors generally miss the wood for the trees. Firstly, put all your effort in Idea. You are getting an opportunity for a large IPO where allotment will be more or less in a very good ratio. So, Idea is the top pick.
Besides that, silver prices are headed higher. We have been very bullish on Vedanta and that has been a huge outperformer. I see Rs 450 coming on Vedanta. I am very bullish on Maruti where Rs 13,500 could come by the earnings
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Lastly, Indiabulls Real Estate, which for me will again be the stock of the year given that the inventory which they had and now with the promoters putting in very marquee names, putting in almost Rs 4,000 crore commitment, you cannot but have real estate be the theme and this stock underperform in a big way. Here the market cap discount is very substantial and I can see a doubling of this stock in this year itself.
What are your views on the PNGRB reviewing the grid tariff? The likes of GSPL will be in the spotlight. How are you reading into the news?
Sanjiv Bhasin: That is the risk you have of regulatory authorities playing up and down on some of these things which are very dependent on the tariffs and the rates and this leaves a little bit of a dampener because if you invest largely on the basis that there is going to be consistency in a large number of regulatory manners, this can be a spoke in the spanner.
Hence, there will be a little bit of a volatile session today and we will see what the outcome is because the impact will clearly be on the numbers. I still think GAIL is one of the best picks we have there and we think GAIL can be a huge outperformer. However, as a caveat, GAIL has been our pick from Rs 125-130, at Rs 200. Risk-reward is not in our favour, but GAIL can still be a relative outperformer, on the others we have to avoid.
How have you read into some of the IT quarterly performances?Wipro was pretty much in line. How have you characterised the quarter gone by?
Sanjiv Bhasin: We knew that this quarter is going to see no more headline glamour and Wipro has come out with very steady numbers. Do not weigh Wipro on a quarterly basis because there has been ups and downs and they have been in line. But Wipro for me is the best largecap pick which we have.
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Persistent numbers were very strong and as a contrarian, we have had a SIP being done on HCL Tech and LTIM. LTIMindtree is going to be the star for me, given that the valuation comfort because of the attrition of some of the largecap people is being made out too much. The LTIM numbers will be out on 24, that could be a real surprise item on the upside. So, my money is on LTIM, HCL Tech. As a disclosure, Wipro is along with TCS one of our top picks in our portfolio. We continue to be very bullish on TCS being the relatively outperformer but Wipro being the best player over here on a price performance which we think can even hit Rs 700 in the space of one year.
At 188, what is the call on the stock of Zomato?
Sanjiv Bhasin: It is more than a tripler for us, sitting pretty. But I think there will be volatility here. It hit a high of almost 200. You can see some more plateauing, some more consolidation but all dips are buying opportunities because it is only consolidating its market share. As a feedback, let me also tell you my son\’s business is now picking up and it is not because of Zomato, it is actually because of Swiggy. Swiggy is doing excellent business and he is saying it is more competitive. It is giving more order flow and he is starting to make a little money. I would say this space is looking very good. Watch out for the Swiggy IPO, it could be a blockbuster.
