"We are bullish on the banking side and the rerating is possible in the companies where there is deep value," Rohan Mehta, Founder and Portfolio Manager at Turtle Wealth says in an interview with Moneycontrol.
He believes there is quite a lot of value now in HDFC Bank as the stock has consolidated over the past 3 years. Also, a re-rating is expected in the company after the merger of HDFC Bank and HDFC Ltd. which was announced earlier this year.
Also read: MC Exclusive | HDFC-HDFC Bank merger to lead to bigger growth opportunity; will not take executive role, says Keki Mistry
With 16 years of experience in the financial world, he says there is no bottom-fishing opportunity for IT.
Most major private banks are out with their quarterly and full-year earnings. Your thoughts and do you expect rerating to continue in the coming quarters?
Banks have done majorly well compared to any other sector, their reason is backed by the domestic demand and the rise of the capital structure of India. We are bullish on the banking side and the rerating is possible in the companies where there is deep value. Banks like SBI, Axis Bank, where the value is higher than the price, still the availability is at 2.5x of price-to-book value (P/BV).
Also, there is quite a lot of value now in HDFC Bank as the stock also has done consolidation for 3 years plus the wedding card is already announced for the merger of HDFC Bank and HDFC, after that a re-rating is expected in the company.
Do you expect the bottom fishing to start in the IT sector after the June quarter numbers?
IT sector across the world will go mute at least for 2 – 3 years, value creation will go extremely tough in this sector, it has shown great growth in the last decade, and all of them were available at a stretched valuation. We will wait for 2-3 years when the value will be higher than the price and that time will be a clear buy for IT especially in large-cap space.
The real buying interest is in small-cap IT companies that are being benefited for their specialized services and innovative products, so clearly no bottom fishing for IT.
Mankind Pharma has received a great response from the QIBs segment. Do you think this is a great business to be added to portfolio? Also, any thoughts on the listing?
It’s a great Company with super dominance of product, consistency in profit and dominance in consumer and pharma space. It looks like a great business with a decent valuation, Prega news and Manforce are one of the strongest brands in OTC.
Your thoughts on overall March quarter earnings season?
We believed the numbers will be muted over a slowdown in the growth in overall business transactions, still, many companies' numbers are awaited. It would be too early to comment on the whole earnings season, but from today's point of view, we believe the companies have delivered better numbers than expected.
Do you expect the Fed to announce its last rate hike in May? If yes, then will it be great news for equity markets?
We believe the rate hike is done, inflation and interest rates are managed in most countries. So we believe in the coming quarters, it would be more of no change in interest rates, than the possibility of rate cuts in a year.
What are the challenges for the market in the rest of the calendar year?
Challenges are just the growth to come back stronger, manufacturing and agriculture to do more good, and the focus of FII over Indian markets will be a larger challenge.
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