One should tender part of their shares and if one has a longer-term view for the next three-four years, even despite the company denying it, the company will have a delisting.
After Hindustan Unilever's (HUL) parent company, Unilever Plc made voluntary open offer to acquire 22.52% HUL shares, Ambareesh Baliga, managing partner, Edelweiss advised investors to sell part of their HUL holdings.
In an interview to CNBC-TV18, Baliga said the move by Unilever looks good only from a business point of view. However, for an investor, the offer price of Rs 600 is a bit expensive.
"One should tender part of their shares and if one has a longer-term view for the next three-four years, even despite the company denying it, the company will have a delisting," he added.
He recommended investors to stay away from the IT sector as rupee's appreciation to 51.50-52/USD is likely, which would add pressure to the IT stocks.
Meanwhile, he sees the Nifty trading between 5700 and 6000 going ahead. He feels the market has already discounted a 25 basis point rate cut.
Below is the edited transcript of Baliga’s interview to CNBC-TV18.
A: In case the numbers are better than expected possibly we could see an upside. I would surely utilise that to exit to a certain extent. Although, I have been bullish on Bharti for the last two years because regulatory issues are in the forefront and that is going to keep pressure on. At the same time Reliance Jio launch will also change the contours of the telecom like what one saw in 2002-2003 and that is also negative for Bharti.
Q: What is your expectation from the May series? If there is a 25 basis points cut tomorrow as expected, do you think it would change the sentiment at all?
A: A 25 basis points rate cut is already discounted. I don't think that will change the sentiment. In case we have 50 basis points, then one could possibly have a bump up. However, overall looking at the political scenario, there will still be pressure on the market. This is more or less the top for the market and the maximum upside we could see is 5980-6000. From there, we should see a correction and on the lower side I see levels closer to about 5700, this should be the range, 5700 to about 6000.
Q: How are you approaching Hindustan Unilever Ltd now after that big run to Rs 580?
A: I would suggest that shareholders tender atleast part of their holdings because from an investor's point of view, it looks quite expensive. I think it makes a lot of sense for them from a business point of view, but as an investor Rs 600 levels it is a bit expensive. One should tender part of their shares and if one has a longer-term view for the next three-four years, I clearly see a delisting although the company has denied it. However, one could possibly, in the next three or four years, have a delisting.
A: At these levels, I am a bit skeptical on the IT space overall. Also, looking at the rupee, it should appreciate going ahead. We see levels closer to about 51.50- 52/ USD and in that case, there would be pressure on IT stocks. Especially after the results in Infosys, I don’t think it is still time to buy.