Sanjiv Bhasin: It has been a star outperformer in the fintech space along with Zomato and the business is only growing. We had a buy call at Rs 750, 800. We have reiterated this will be an outperformer. Yes, it ran up far ahead at 1500, but we still think this is one of the best plays as far as insurance and as a platform on fintech. So, buy on decline would be the key. This is a star. This must be in your portfolio. We are overweight. As a disclosure, this is in our portfolio.
What you are anticipating from L&T coming out with its quarterly performance today.
Sanjiv Bhasin: The numbers will be reasonably strong given that there is a backdrop of huge execution and somehow you have seen some cooling down in input costs. Margins may be slightly above 11-12%, but what has happened is in this whole gamut, a large part of the capex stocks have now run full on valuations, which is why we have been suggesting that some of the FMCG were the stocks which you had to buy. So, in line numbers and we will wait for the commentary. The stock already prices in a large part of the positives. We know there has been some sort of an impact as far as the Middle East goes but I would wait for the conference call. The stock seems to be fully priced at the present moment. We will wait for earnings and the outlook which the management have, which should be very positive.We were just discussing FMCG yesterday and what a big move is coming in across the sector. Be it Marico, Godrej Consumer, Unilever, the entire pack was abuzz. Have you extended your list from Unilever, added more names to it perhaps?
Sanjiv Bhasin: For once, we caught the bottom of Unilever at Rs 2,200 and that is where we said that there cannot be a better stock to buy and that is evident now. Marico, Unilever, Nestle, Colgate, all four are in our portfolio. We have not extended. We would wait for some decline before adding, but we have turned overweight on this and technology. We think they are going to take the mantle forward and you should take some money off PSU banks, capex stocks, which are fully priced now on earnings. But yes, Lever is our star and we still think Lever is headed to Rs 2,700 in the next six months.Given that Tata Motors is coming out with their quarterly performance, autos by and large as well have been at the forefront. How are you looking at earnings? Where are you finding comfort within auto ancillary and auto?
Sanjiv Bhasin: The good news came that they have extended 18th as a trading day but they have given up the concept of extending trading hours. I had prepared my bed over here in the office and that will be done with. I am very pleased with that. It leaves more time for us. Coming to Tata Motors, a large part of the best news may be in the price at Rs 1,000, maybe it is fully priced, but if you are looking for the next six months and a China comeback, especially for JLR, that is seen very strong.
I think three sectors – autos, specialty chemicals and metals or commodities are going to be the play from China. China has seen a re-rating and we have seen a strong accumulation. In fact, some FIIs have now started to sell here and buy some of the Chinese, particularly these three sectors, which I have said. So, I would look for the language of Tata Motors. JLR has been a rather sweet spot as far as the UK goes, but let us see how China plays out, because that is where their main emphasis lies.
What are you making of Voltas’ numbers because the fact that there was all around margin disappointment, that does come as a surprise.
Sanjiv Bhasin: Correct and we expected that, the stock had already run up fairly when there was a strong winter. But Voltas is not a one-day or a three-week story or a three-month. It is going to be the consumer facing arm of the Tatas and they are putting a lot of emphasis on that. Now, we know that some sort of margin pressure played out on the engineering side in the Middle East and that could be a one-off. But at this price, I would not advocate a buy. I would say, let it settle down, look through the numbers, give it some time. The stock has almost doubled from Rs 750, 800, where we had a buy and we think a large part of the good news is already there, even though we are at the onset of a very strong summer where sales will be very strong.
We have spoken about real estate quite extensively, but do you believe that it has the momentum to continue for this year? Would you be looking at infra as well?
Sanjiv Bhasin: You cannot believe it. The prices, at least where I stay in Gurgaon, are hitting the roof, and there is no let-up. DLF is selling like hotcakes, so is Godrej and this triple effect of wealth, gold, silver, stocks, all-time highs is seeing a large part of the overall inventory reduced in prime cities. I think it is the same case with tier II, tier III. Look for the input cost, cement, steel, those are going to do well but a large part of that is in the price. We think Indiabulls Real Estate is the best proxy play we have with Rs 6,000-crore market cap and Rs 4,000-crore capital infusion. On 22nd May, I think they will get the NCLT merger move nod where Embassy will take over. For Embassy itself, commercial rates are hitting new three-year or four-year highs, which is telling me that they are in a very sweet spot. Maybe a part of the stock prices are already priced in and we have to look at the horizon. If you have a longer-term horizon, then you can still buy or wait for a correction if you have a shorter horizon
