We would stay away from financials as no one knows how NPAs would pan out after the moratorium. This, and the anticipation that SBI has become a lender of last resort, where, in any case of a fall out of a PSU may lead to a merger with SBI. This will keep the stock under pressure, Sumit Bilgaiyan, Founder of Equity99 said in an interview to Moneycontrol's Sunil Shankar Matkar.
Q) Despite the Rs 20 lakh crore fiscal package the market has continued to fall. Will it gain momentum in the coming weeks despite rising new infections?
A) The market is disappointed by the fact that much of the stimulus is focused on sustainment, ease of liquidity and fluidity on the supply side, rather than one which could stimulate demand and thereby kickstart the economy.
Q) What stocks will benefit from the announcements made so far?
A) Rural and Agri related stocks like fertilizer, agrochem, tractors, 2-wheelers provide a better growth outlook and are relatively immune to slowing economy which we would prefer.
Q) Some analysts have opined that PSUs will be impacted the most from the measures, especially SBI. Do you agree? Also, should one buy SBI at current levels?
A) We would stay away from financials as no one knows how NPAs would pan out after the moratorium. This, and the anticipation that SBI has become a lender of last resort, where, in any case of a fall out of a PSU may lead to a merger with SBI. This will keep the stock under pressure
Q) Have you revised your earnings estimates for FY21/22 after the Rs 20 lakh crore stimulus?
A) The containment of COVID-19 and opening of economy is the biggest thing we will monitor. Until that time, any earnings estimate is more of a guesstimate as the situation is ever-evolving.
Q) In light of the pandemic, do you think people should switch heir asset allocation from physical assets to liquid assets? If yes, then what are those top 3 stocks to look at?
A) We think beyond a point people will start shying away from equities to safe heavens of FD and gold and in certain cases where people have excess liquidity they may choose to look at real estate also.
Advanced Enzyme Technologies
AETL is a research-driven company with global leadership in the manufacturing of enzymes. Its PAT has grown at 40.75 percent and income has grown 11.94 percent CAGR over the last 5 years. Mutual Funds held 8.78 percent and FPIs held 13.32 percent stake in the company. Stock is looking highly undervalued at CMP. We are recommending a strong buy for medium to long term.
DAL with more than 150 registrations including Herbicides, Insecticides, Fungicides and Plant Growth Regulators /Bio- Stimulants and with over 350 active SKUs has one of the most extensive market penetration in agrochemical industry. Agro related industry is looking attractive during the current scenario and DAL is the best pick from this sector. We are recommending a buy in a staggered manner for medium to long term.
The company designs and manufactures aircraft, helicopter, power plants, inertial navigation system, auto stabilizer, laser range system, flight data recorder, communication equipment, airborne secondary radar, panel instruments, and general forging. HAL's Order book is above Rs 55,000 crore. It paid 198 percent dividend for FY19 and paid 332.5 percent interim dividend for FY20. At the CMP of Rs 523.5, the stock trades at a P/E of just 6.35x. We are recommending a buy in a staggered manner for medium to long term.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.