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    3 value buys for a 20% upside by this Diwali: Sanjiv Bhasin, IIFL Securities

    Synopsis

    I want to chase industrials and other sectors where I can get an extra delta, says Bhasin.

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    Ashok Leyland at Rs 94, Eicher at Rs 20,000 and Mahindra & Mahindra at Rs 715 are all three value buys for a 20% upside by this Diwali, Sanjiv Bhasin, Executive VP-Markets & Corporate Affairs, IIFL Securities, tells ET Now.

    Edited excerpts:



    Why have Reliance and TCS suddenly started outperforming?

    No, not only Reliance and TCS. There were Asian Paints, ITC and L&T also outperforming. It is telling you that smart money is buying industrials and select IT stocks. Of course, TCS has been a prime portfolio pick, but capital goods stocks, industrials are going to be the outperformers and that is where real money will be made.

    So, whether it is power capex or construction, that is where you will see a lot of delta being created on the long side. And it has been the old folly, buy the fear sell the greed and that is evident when you hit that 10,500-10,600 mark when fear is there but it is also the best time to stick our neck out. This time greed is going to expand. 11,200 in second half of January is well on its way because you have a global tailwind now in the shape of equities raring to go and feeling missed out. We are seeing huge inflows into equity.

    Yes Bank has sent two names to RBI. ET Now has learned that there are two internal candidates. If eventually, Rana Kapoor is replaced by an internal candidate, what do you think will happen to the stock? Also if the successor of Rana Kapoor is an external candidate, what do you think will happen to the stock?

    In the short run, Yes Bank has become a trading stock at 160-200. If you do get a positive which the market likes -- an internal candidate -- maybe you get 220 on the upside. But we will wait for the results, the divergence patterns and so on.

    On the down side, it seems to have a lot of buying around that 170 levels. On a fundamental count, it is a good brand and it is a good portfolio stock but you need to weather the storm because it has been in the eye of the storm given that over ownership from foreign institutions at Rs 400 has seen it hit Rs 170.

    I would say status quo and not so much change. The positivity has to come from the divergences and the management guidance on the way forward.

    What is your expectation from TCS given the strong 40% plus up move that we have already seen in the stock all of last year? In the last six months, TCS has been more sedate. Would you say that if the numbers are weak along expected lines and if the stock does correct, it is an opportunity to buy assuming that 2019 has the same kind of momentum as in 2018?

    Well that is a good point. It has been the darling of the markets for the last one year but this year it has only flattered to deceive. I think it is richly valued, you have got the bonus, you have got the buyback all in the price. Firstly, I do not see IT being an outperformer.

    Secondly, the rupee as a headwind is now a tailwind or maybe there is status quo and thirdly you have got guidances from Apple and Samsung all over the place for a huge disappointment. As a fallout of that, TCS will definitely be impacted marginally on some businesses.

    At the end, I want to chase industrials where I can get that extra delta. So, we are looking at a whole gamut of stocks including corporate banks like ICICI, Axis, SBI, L&T and Asian Paints. We are also looking at power, PFC, REC, NBCC, NCC. That is where real money is going to be made. TCS is going to be a prime space as a portfolio pick but do not expect market-oriented or below market oriented returns for TCS in this year.

    Do you believe sub 20,000, Eicher is getting to a value zone? Would you buy it right away or would you wait for some more correction in the stocks?

    Yesterday, the standout part about IndusInd Bank’s numbers was that credit growth has expanded and their CASA ratio plus the net interest income were very strong. They have given you a very strong pipeline. IndusInd is the largest player in the commercial vehicle segment and that also along with Mr Vinod Dasari’s observations on Ashok Leyland at Rs 94, Eicher at Rs 20,000 and Mahindra & Mahindra at Rs 715 are all three value buys for a 20% upside by this Diwali.
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