Sanjiv Bhasin, Director, IIFL Securities, says people are talking of largecap underperformance. But the stars have been REC, PFC, NTPC, and Coal India. While people kept doubting the PSU rally, they kept going higher. There is still more steam there. I would not advocate buying fresh ad hoc, one can do SIP in some of these stocks. These are on a multi-year high, which means there is much under participation, particularly from mutual funds and FIIs that these stocks are going to be huge outperformers.
Is there a trade in the short term in any of the jewellery, retail or textile stocks, considering everyone I have spoken to, referred to very long lines outside big stores.
Correct. I think Reliance Retail will be the biggest beneficiary. They are adding about 800 outlets per quarter. One thing which is getting unnoticed by the market is how fast Reliance Retail is expanding into the market share and gaining market share. Earlier, they had about 2,000 outlets, now it is 800 per quarter. You can imagine how fast this multiplicity will be and that caters to all needs.
Second, if you want to buy jewellery, most people will suggest smaller names, but stay with the brand leader, Titan. In North India, you cannot believe how many weddings there are in the next two months and Titan will be the best play on that.
Thirdly, you said textile. So you can buy a mix of stocks. Nahar Spinning and Monte Carlo are two stocks which we own from much lower levels and we think they are a very good play on the expanding market, both on the woolen wear and the cotton textile. These are a few names which I can suggest.
Given that there has been a furious rally taking place within the entire PSU space, a lot of the defence sector and railway stocks have had a pretty powerful run. Is there more steam left in this space and which stocks do you like?
Everyone is talking Samvat to Samvat. Someone is talking of largecap underperformance. The stars have been REC, PFC, NTPC, and Coal India and you kept doubting the rally and they kept going higher. There is still more steam there. I would not advocate that you just buy fresh ad hoc, but do a SIP in some of these stocks. These are on a multi-year high, which means that there is so much of under participation, particularly from mutual funds and FIIs that these are going to be huge outperformers.
You can add a Tata Power which will be the best power play on the private side but do not miss this basket of REC, PFC, NTPC, and Coal India and add an NMDC. If you bought these five stocks as SIP, you will be richly rewarded for next six months but add Tata Power in that basket.
Let us look at some midcap names which have done rather well for themselves. Actually not midcaps, but two-digit names. One is Vodafone, second one is JP Associates. Vodafone, we have discussed again and again with you but what is the reason why a business like JP Associates has made a comeback? Nobody thought Suzlon could make this kind of a comeback, both in terms of business and perception, Rs 3 stock has become a Rs 40 stock.
A disclosure, I have it in my portfolio and I have been advocating it since it was Rs 8-9 which was very frustrating for most. The simple reason JP is making a comeback is because out of that Rs 27,000 crore debt which they talk of, almost Rs 23,000 crore is on an SPV which is going on in the NCLT.
ICICI has actually said that they should be out of NCLT because a large part of their businesses, particularly their civil contraction and other businesses are doing extremely well. They are into hotel and hospitality. They still have a five million tonne capacity on the cement side, clinker which is under sale and if you took sum parts of all their businesses, then the value of the asset will be far greater than the market cap even now after doubling and that was what the reasoning behind it was.
Secondly, they have got a lot of relief in the shape of the large part of the debt being in NCLT. There has been an absence of an Allahabad court judge for the last two years. One can imagine how long this has gone on and like I said, the value has risen in the eyes of the beholder but you have to go through the pain.
Vodafone, simply put, is two things, 42.5% EBITDA on a turnover of around Rs 10,700 crore. Now there is hardly any loss of subscriber base. 5G penetration has already started in about five cities. Three, the infusion of capital will reinforce confidence in the lenders. Four, 33% is owned by the Government of India. They have not defaulted on any bank loan as such, but the perception has always been bad.
The ARPU is at Rs 142 and rising and given that there is going to be capital infusion again, that will reinforce confidence. I would think this can set the base for this stock to be a huge outperformer on the back that business is very good but the problem has been capital, the problem has been a slight bit of perception and that all is on the anvil of seeing a huge change.
We are looking at a decline in crude price and a drop in demand. We are looking at China slowing down and the US has also hit peak growth according to all economists. If the underlying template for commodities is weak, why should Coal India and ONGC do well?
Half the credit goes to Putin and the Russia-Ukraine crisis, which actually changed the whole scenario of thermal power and where people had written off Coal India at Rs 90. Thermal will no longer be in existence and so on. All those soothsayer have been caught on the wrong foot. Power is in a very strong space, recoveries, receivables, transmission, and thermal power in India is a no-brainer.
Given how the whole Russian crisis escalated and told us that the demand for coal is going to be huge. Now, in this backdrop, one can understand that ONGC was a value play, even at Rs 90, even at Rs 150 and despite crude prices being volatile, look at the numbers.
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