Connect with us

Hi, what are you looking for?

Finance

4 stocks Deven Choksey would like to add on dips

Any fall in crude oil prices is definitely a benefit for OMC..

Any fall in crude oil prices is definitely a benefit for OMCs but it is better to go for Reliance rather than the state- owned ones, Deven Choksey, MD, KR Choksey Investment Managers, tells ET Now. Also, Choksey remains confident on Cipla, Bajaj Auto, Bajaj Finserv as well as HDFC Life and would like to add these in a corrective downside.

Edited excerpts:

Would you buy ICICI Bank and Axis Bank?

A few things have gone favourably in case of ICICI Bank. They are sitting on liquidity. They have got a shot in arm by buying the assets of NBFCs which is helping them to create a lending portfolio and at the same time, help in deployment of funds and bring clarity about the earnings.

The third important aspect is that NCLT-led proceedings are helping most of the banks at this point of time. Given the scenario in which NCLT auctions are happening, a lesser haircut would working very positively for banks in general and some of the banks in particular.

From all those perspectives and given the kind of valuation at which ICICI is quoting currently, one feels confident about the protection on the downside, as a result of which there could be a buy opportunity. However, the market is not very certain at this point of time

There are strong headwinds. Global markets are definitely bothering us because funds are being withdrawn from the system currently, particularly by those ETFs operating out of the country. As far as the market upset is concerned, that is where one will have to be a little bit more careful in adding stocks into the portfolio. Do not go aggressive, go gradual in your buying approach at this point of time.

Would you recommend buying anything at the current levels?

We have been selective about looking at the area and we found insurance is one area where we felt confident. At the same time, it is the life insurance business which is showing a higher traction. You are finding higher amount of growth coming into the new business premium collection and as a result, these companies are showing the CAGR possibilities of around 20% plus in their businesses.

Given that kind of situation, the insurance business remains a favourable pick at this point of time. HDFC Life with the current embedded value to EBITDA and Bajaj Finserv with the insurance twins in their portfolio are also attractively positioned, given the growth and valuations. I would think that this is an opportunity to buy into some of the quality stocks in insurance basket, also some NBFC companies which have been affected because of the sentiment in the market.

But their books are really qualitative and we like companies like Bajaj Finance in this particular space and we like to hold this company.

Selectively, we also find some of the auto companies demand merit. Both Maruti and Bajaj Auto are looking interesting. If there is a soft Brexit and if China starts helping Tata Motors, it could be seen as attractively positioned. Ashok Leyland has a good order book. BS-VI regulations are coming into play from next financial year. This is where companies like Ashok Leyland should be favourably looked at. So, yes, we have been selectively looking at the companies. I mentioned some of the names. We find they are attractive enough to consider them into the portfolio.

What is your view on OMCs?

Any fall in crude oil prices is definitely a benefit for OMCs and the kind of cut that they have been asked for would to a greater extent get neutralised with the fall in the oil prices. I have not got the exact calculation right now with me but I believe if we have a $10 fall, then you can easily absorb the excise cut that the government had asked for.

In this kind of situation when the government start dictating to the oil marketing companies which are public listed companies, it is not in keeping with good corporate governance spirit and is bad for retail shareholders. So, I am a bit unhappy about it.

I do not think that in a sector where the government intervention is regular, a ) company would demand or command higher amount of valuations. The oil marketing companies are going to be victim of this kind of situation. We have been keeping our views reserved on this subject and we have been saying that OMCs are a safe bet to avoid and that is where we are validated today.

A better focus should be with likes of Reliance where you have larger clarity because of their ability to export their petroleum and refining products. That is where Reliance could be a better choice rather than the state OMCs.

Give me a flavour of your top three holdings.

Currently, we are invested in some of the pharma companies. The portfolio carries weight in the Cipla kind of companies, We are confident that this company would have relatively better time in the coming six months where some of the new products will get launched. You will have a better visibility of revenue coming in from their side. This is one company we are most confident about.

The other company where we are confident now is Bajaj Auto after price correction. We believe that the company is playing its strategy right. They are systematically using their balance sheet with Rs 15,000 crore cash in the portfolio to command this particular market share.

This company is positioning itself very well with exports and the three-wheeler, four-wheeler portfolio that they have. In the next 12 months, they would have the electric vehicles in the form of three-wheelers, four-wheelers and two-wheelers. The stock is appearing really interesting from investment perspective.

Bajaj Finserv which I mentioned earlier, is another favourite. We continue to like the insurance businesses and that is why we put higher weight on Bajaj Finserv and HDFC Life.

These are the few stocks which we hold in the portfolio and we would like to add in the corrective downside if the market gives further opportunity.

Original Article

[contf]
[contfnew]

ET Markets

[contfnewc]
[contfnewc]

Finance

In an interview with ET Now, Dabur India Director Mohit Burm..

Science

The 147th Open championship will be at Carnoustie Golf Club in Scotland. Jan Kruger/R&A Golfers ..

Tech

Enlarge Oliver Morris/Getty Images) In response to an Ars re..

Tech

Enlarge/ You wouldn't really want to use Nvidia's ..