Bullish on Reliance, expect to touch Rs 1600: Rajen Shah

Latha: What about Bharat Financial Inclusion. What were your key takeaways after the conference call?

A: I was on your channel in the month of February and I was asked about Bharat Financial and I had said that I would sell the stock with both the hands - these were my precise words. However, I continue to maintain. The stock could head down to Rs 600 level or so.Anuj: How are you playing the metal pack now?

A: Metals have moved up significantly. I would be on sidelines as far as metal stocks are concerned. The prices are still quite high and the companies would be reporting good numbers but stocks like Hindalco Industries have moved up from Rs 70 to Rs 200. So I would not put in my hand.

However, there are plenty of opportunities beyond metals and even in the IT space, frontliners are at reasonable levels, pharmaceutical sector is looking okay, the smallcap segment is looking full of opportunities. So metal is not the space I would be in especially when China is talking about 6.5 percent kind of growth. I do not think metal prices would sustain at this kind of levels for a long time.

Anuj: What would be your preferred picks in pharmaceuticals?

A: Some of the frontline companies have come down to interesting levels and they have been market underperformers for quite a long while, so Sun Pharmaceutical Industries could be interesting at the current levels of about Rs 650 or so - this would be one of my pick. In the multinational corporation (MNC) space, some of the companies have started moving up quite sharply and our pick in the MNC space would be Novartis India, the promoter holding is quite high and probably the Swiss promoter may go either for delisting or merger of some of the 100 percent subsidiaries with this listed entity or something could happen because the marketcap is just Rs 200 crore, sitting on huge cash and the parent is trading at a marketcap of more than USD 150 billion. So Novartis could be an interesting play.Latha: Your thoughts on the other non banking financial companies (NBFCs). Most of them had a stellar run already. Is there anything you like there?

A: We like Mahindra & Mahindra Financial Services. Over the past five-six years this company has gone nowhere but now with the focus of the government on rural India and a plan to build one crore houses in the lower segment. However, Mahindra & Mahindra has 100 percent subsidiary which is into rural housing finance, should do very well. If you see the number of employees, over the past five-six years, they have gone up by 60 percent. The branch network has doubled but the profit is at the same level. So most of the cost has got absorbed and now profit should start spurting from next year onwards. However, I personally own the stock and I would recommend it strongly.

The second stock which could see some smart move is Reliance Capital. It's a short-term bet but valuations are very compelling in Anil Ambani Group, many of the companies are trading at reasonable valuations and Reliance Capital should clock about Rs 900 crore of profit, marketcap is about Rs 13,500 crore. So at 15 times, it's one of the cheapest NBFC. So Reliance Capital could see about 10-15-20 percent kind of an upside in six months.(Disclosure: Network 18, which publishes moneycontrol.com, is a part of the Reliance Group.)For entire interview, watch accompanying video.