In an interview to CNBC-TV18's Latha Venkatesh, Sonia Shenoy and Anuj Singhal, Deven Choksey, MD of KRChoksey Investment Managers shared his reading and outlook on the market and also gave recommendations on various stocks.
Below is the verbatim transcript of Deven Choksey's interview to Latha Venkatesh, Sonia Shenoy and Anuj Singhal on CNBC-TV18.
Anuj: What are your thoughts on HDFC Bank and Cadila Healthcare, how would you approach them now?
A: On the HDFC Bank side, once this band restriction is out, probably the premium valuation at which the stock was trading over a period of time, it should get even out maybe in the near-term we might see somewhere around 4-5 percent premium valuations continuing for the stock per se but over a period of time, it should get even out.
At the same time, today the market should react positively on this particular news and as a result of which both, HDFC Bank as well as the Bank Nifty should be looking up due to this particular restrictions being removed.
So to a greater extent, I think we would see normalise effect but in the near-term you should be seeing the premium upmove continuing as far as the stock price is concerned.
So it is more of a technical interpretation than anything to do with the fundamentals at this point of time of the company.
As far as the Cadila is concerned, certainly it is giving a larger amount of visibility now with the plant being cleared from the observations obviously, what we are expecting is that they need to report at least two years down the line, we are seeing a visibility of close to somewhere around USD 950 million kind of a revenue will be coming up from this space alone for them. As a result of which the stock should be performing better going forward. So certainly it is a positive news for Cadila.
Sonia: The other space I wanted to ask you about is the auto space because plenty of stocks yesterday hit 52-week highs there whether it is TVS Motor, Bharat Forge, some of the auto financers like Bajaj FinServ, at this stage, where do you see value, in which stocks?
A: The rally probably is also driven by the fact that more amount of business situation improvement happening particularly in the area of commercial vehicle as I see it. This quarter appears to be probably one of the best quarters for commercial vehicles in the recent times.
We should be seeing a larger volume growth coming in from this space.
Obviously the companies attached to commercial vehicles on the ancillary side are also doing well and they are talking about higher amount of order executions. So certainly, this is going to be a very positive move for commercial vehicle space.
Unfortunately, Tata Motors is facing the derating as far as the market is concerned due to the result announcement and non-transparency that they have demonstrated. With the problems that they reported subsequently in this quarter. So otherwise, Tata Motors remains relatively a better choice compared to others because the valuations are also remaining quite attractive.
At the same time, we should be seeing some amount of recovery happening into the likes of Mahindra and Mahindra (M&M) and also into two-wheeler space like Bajaj where are seeing the higher amount of volume possibility in this particular quarter. So certainly, the auto space in general looks good. Many of the ancillary looks quite interestingly positioned. With the vehicle scrapping policy getting announced soon, we should be seeing a larger amount of growth from many of the ancillaries, likes of Bosch, those kind of companies should remain in the most interesting among the investors.
Sonia: Cannot take your eye off HDFC Bank, for a long-term investor, it is party time now. Record highs 8 percent gain in a single day, what do you do with this stock now?
A: For long-term investors, you need not change your view of investment. This is a premium proposition that need to remain. So very clearly looking like. The way in which they have emerged and the way the company is building their business on a consistent basis, I think that there is no need for long-term investors to change their view and stay invested in this particular bank very clearly.
Though, I do agree that the stock trades at a premium and would continue to command little bit more premium. Till the time you see similar kind of franchise emerging in the private sector or corporate sector banking space, you would see typical premium commanded by HDFC Bank continuing. In that kind of a situation, maybe in the short-term, you might want to book some profit and then re-enter into the stock at a level but that is an individual call. Long investment one could probably stay invested.