Sudip Bandyopadhyay, Group Chairman, Inditrade Capital, is betting on Ashok Leyland and Motherson Sumi
What is the outlook on the auto basket?
Now, I am looking at the commercial vehicles segment. The pickup in demand in commercial vehicles is real and probably we are just seeing a beginning of this pickup in demand and on the back of this, my bet will be on Ashok Leyland. They have about 50% plus of the bus market both in India and a lot of other emerging markets like Bangladesh. They also have a significant presence in other commercial vehicle segments. Ashok Leyland is on a very good wicket at current levels and one can pick it up. We are looking at a target of Rs 175 as far as Ashok Leyland is concerned.
In case of two-wheelers, there is a long way to go. At the current valuation, I am not in a rush to buy two-wheeler stocks. But if somebody has a long-term portfolio building outlook, they can pick up all the three listed two-wheeler companies – Bajaj, Hero and TVS -- for different reasons. Bajaj for having a balanced portfolio between domestic and exports; Hero for deep and rural penetration and TVS for improving margins.
In case of ancillaries, it is a different story. It is a very large universe. We are bullish on Motherson Sumi in spite of the upward movement in the stock price in the recent past because of the diversified nature of their geographical presence and customer base which includes pretty much all the major global auto majors and also their presence across the ancillary value chain. Motherson Sumi has a long way to run. The replacement of traditional vehicles with electronic vehicles will give incremental business to a company like Motherson Sumi. It is our pick among auto ancillaries.
What is the view on SBI?
We have been extremely positive on SBI for quite some time and we maintain our view. SBI has been doing pretty well, standalone and the asset quality has been continuously improving. As for provisions, to a great extent, whatever needed to be done has been done and with the economy picking up, the asset quality will improve as well.
The other interesting part is that a lot of these written off assets which are in NCLT and different forums the recoveries from those should start pretty soon. The next important part as far as the SBI stock is concerned is that the subsidiaries are performing exceedingly well and SBI has been strategically exiting or selling the subsidiary shareholding and generating profit and capital.
This gives SBI the opportunity not to go to the market and raise fresh capital and further dilute it for the next couple of years and this augurs very well for SBI as a stock. We believe the stock has a long way to go from here and investors with a long-term view should get into SBI even at current levels.
What is your sense when it comes to the telecom space?
Definitely
Bharti Airtel
as well as Reliance Jio are the leaders at this stage and they are doing extremely well. Of course, Bharti with the restructuring which they are proposing, are probably trying to create a model like a Jio Platform and get into a valuation which is significantly higher from the current levels.We believe in the Bharti story and at current levels Bharti Airtel can definitely be bought by the investors. Their international business has started performing very well. In domestic business, they are beating
Reliance
NSE 0.92 % Jio in terms of customer additions on a quarter-on-quarter basis and of course the revenues are picking up. Now the ARPU has to start moving and as and when it starts moving, it will be a great story. So, investors can position themselves in Bharti Airtel.Jio, of course, has been very talked about and it is a great story. Yes, the ARPU has moved up from where it was but it needs to move further up. For Reliance, overall the revenue and the projections which most of the brokerages have put out to get achieved the entire thing depends on Jio revenue upward movement and we will be keeping a close eye on that.
As far as
Vodafone Idea
is concerned, to a certain extent, the uncertainties about its survival are over. However, the fundraising part is a huge challenge and one has to see how far they are successful in that. I firmly believe that from a situation where it was on the verge of winding down, there is a fitting chance of survival and flourishing. We will probably end up with three large players and VI will continue to be one of the dominant players along with Bharti and Reliance Jio.What is your reading of the Reliance O2C reorganisation which was announced yesterday?
This is a step in the right direction for the Aramco deal but one does not know whether Aramco will happen and on what valuation it will happen. They have also talked about multiple other newer businesses coming under the umbrella of this new company. Knowing the execution skill of the group, there is a reason to be bullish about the new company and the overall group as well.
When it came down below Rs 2,000 it was a very good buy. Even at the current level, Reliance is a good buy. We have a one year target of Rs 2,500 at this stage. This does not factor in a deal with Saudi Aramco, this does not factor in the listing and value unlocking of Jio Platform or retail. Overall, we are extremely positive and this is a step in the right direction.
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