Comfortable holding Infosys as most bad news priced in:Ashburton

It has been a mixed earnings season so far and couple of stock positions have certainly disappointed says Jonathan Schiessl of Ashburton in an interview to CNBC-TV18.

Schiessl is concerned about non-performing loans issue at Axis Bank but feels its notable that the bank is at least openly talking about issues and working to get ahead of the problems.

Managements of information technology companies, he says, have been downbeat on guidance due to the uncertainty following Brexit. On Infosys, he believes most of the negatives are likely already priced so would be comfortable to still hold on to the stock.

He also shared his view on the pharmaceutical sector.Below is the transcript of Jonathan Schiessl’s interview to Sonia Shenoy and Anuj Singhal on CNBC-TV18.Sonia: It is a very chaotic time here in India because a lot of big earnings coming out as we speak and from your largest holdings, there are companies like Infosys and Axis Bank that have reported weak numbers or weak earnings this quarter, how have you reacted to that and would you trim your positions in any of these names?A: It has obviously been a mixed earnings season that is for sure. We have got a couple of positions which certainly have disappointed. We are sitting back for the moment, we are very underweight indices as it is. I know it is a big position for us to be underweight the stock so we are not quite so concerned about that at the moment, but clearly, Axis Bank and the banking sector as a whole still suffers from the whole non-performing loan issues (NPL) that seems to be going on and on. Broadly speaking when we look at Axis and we have not finished our analysis of the numbers yet, but when we look at Axis yes, there are clearly problems but they seem to be getting ahead of their issue and at least they are talking about the issue and being upfront about the problems that they have.Anuj: What about Infosys because that stock did try to take leadership position but Q1 numbers surprised a lot of people, and even the management commentary?A: Yes, and obviously, the commentary was quite key and that is still a little bit downbeat as well. So, clearly, some companies are using the whole Brexit issues and what is going on with sterling and so there is a great deal of uncertainty when it comes to sterling earnings and obviously there is that political shadow about what is going to happen in the US in a few months time. So, managements are being a bit downbeat in their forward viewing statements. But broadly speaking, the stock did fall very sharply on the day of the earnings and some of that negativity has been priced into the current stock market. So it would have been nice to do something potentially before hand, but obviously we did not. So, we think the bad news to a degree is in the price so we are reasonably comfortable with holding the stock at the moment, but clearly we are keeping a beady eye on what is going on.Sonia: I noticed that you have been underweight on healthcare for a while, but I still want to ask you your view on Dr Reddys Laboratories because that is the biggest loser today, down 10 percent and as they say, the best time to buy a good company is during troubled times in the industry. Would you use this as an opportunity to buy into any of the pharmaceutical stocks that are plagued with some problems like Dr Reddys or would you stay away?A: Funnily enough, we only have a small weighting as you say, to pharmaceuticals. We only have a couple of positions and we have actually added to them a couple of weeks back. The pharmaceutical group as a whole has been underperforming for quite a few months, but to be fair, that was following a very lengthy period of outperformance of the group. Food and Drug Administration (FDA) worries clearly have been at the fore, but we are through the worst of that. So, we have been very underweight, it has been the right call, we are still underweight but we still have reduced that underweight in both the stocks that we hold in the sector. But we are still not prepared to push it to an overweight call because our overall view remains that we would rather be more domestic as opposed to export focused.Anuj: Do you think the valuations in India have run up a bit too much or since that is a global factor you will not worry too much about that?A: Clearly, in the short term we are certainly trading at quite lofty levels and you look at some of the midcap names with the moves that we had over the last couple of months it is somewhat dizzying when you see some of the stock price moves.