Feb 15, 2017 11:21 AM IST | Source: CNBC-TV18

Thomas Cook showing signs of improvement: Deven Choksey

In an interview to CNBC-TV18, Deven Choksey, MD of KRChoksey Investment Managers shared his readings and outlook on specific stocks that came out with good quarterly numbers.

In an interview to CNBC-TV18, Deven Choksey, MD of KRChoksey Investment Managers shared his readings and outlook on specific stocks that came out with good quarterly numbers.

Below is the verbatim transcript of Deven Choksey's interview to Latha Venkatesh & Sonia Shenoy.

Sonia: There were plenty of stocks in the broader markets that came out with good numbers like Thomas Cook India, Vivimed Labs, Ashiana Housing, a lot of good numbers coming in. If you have passed through all these numbers, anything that stood out as interesting?

A: Thomas Cook could be one good company which should be seen closely going forward as well. However, we are yet to go through the complete detail analysis on the numbers, but since it is in the coverage, we have seen the company's performance in the past and vis-à-vis the past performance, this quarter's performance looks relatively more stable. It is showing signs of improvement. So within the list, which you mentioned, probably Thomas Cook could be a good choice to look into.

Latha: What did you make of Tata Motors? Are you going to buy or sell the stock when it dips?

A: The way in which I see this particular company, on one side there is Jaguar Land Rover (JLR) portfolio and on the other side the domestic portfolio.

Let's talk about the domestic portfolio first and the commercial vehicle segment within that - this quarter seems to be exceptionally bad quarter for the company as far as commercial vehicle segment is concerned and as a result of that they have been showing exceptional losses on standalone performance of  the company, but at the same time the passenger vehicle, the car segment portfolio has started showing the volume growth though I am not too sure about the profit contribution to the portfolio, but having seen the kind of worst of the performance probably the car portfolio for  the company could see relatively better times in the coming quarters.

Commercial vehicles, I believe Q4 is going to be a big quarter for most of the commercial vehicles and so it should be for Tata Motors. Therefore, I would rather like to believe that Q4 should be giving the performance once again back on the track as far as domestic market is concerned both from commercial vehicle as well as passenger vehicle.

However, on the other side JLR's portfolio where we have some challenges in the form of new model which are coming on stream. These new models will be replacing or cannibalising the existing models. So on one side existing models are getting phased out particularly on the Range Rover side; those models are getting replaced now. I think they hold better profit margin potential within them. However, in the initial period you might be seeing some amount of absorption of cost particularly for the marketing side. The other challenge could be on the US side, where the numbers could possibly show relative resistance because of the policy of the government in that country. So that's relatively a challenging portfolio as of now. I believe that the company at price around Rs 450-475 range should be a good opportunity to accumulate.

Sonia: What are your thoughts on Reliance Industries? We are not getting leadership from any other pockets in the market. Do you think Reliance could be that strength for the market and would you recommend buying at these levels?

A: It is neglected valuation stock, as I would like to call it. The company holds all the fundamental strengths and probably the serious buying in the counter would happen if the allocation of fund starts taking place into this counter. However, if you see the kind of value proposition that the company has built through its organic businesses, all refining businesses, the petrochemical businesses, all of them have expanded the capacity and they are promising to have better volume lead growth coming in FY17-18. At the same time the newer businesses like Jio etc, have already started acquiring good amount of customers and registering their presence across the country. So it is a matter of time that you should start seeing their revenue coming up in the books from this particular activity as well.

However, as I see it from value proposition, Jio itself should be holding around Rs 450-500 kind of value in the share price of Reliance. So the core businesses are available at relatively far attractive price. So it's a matter of time that this kind of neglected valuations gets picked up in the market and serious money gets allotted to this counter.     

Latha: Anything stood out for you from the bunch of midcap numbers?

A: There are too many of them to get an attention to but some of the companies from Adani particularly Adani Ports and Special Economic Zone though it may not be called typically a midcap company but Adani Ports continue to show relatively strong performance and the amount of cargo volume handled is more than 25 million tonne and promising to grow further because of new ports into operations. So this could be one good company which has caught my attention and this could be an opportunity for long-term investment as well.

(Disclosure: Network 18, which publishes, is a part of the Reliance Group.)

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