Mayuresh Joshi, VP- Institution of Angel Broking told CNBC-TV18, "In terms of valuation Asian Paints looks probably on the higher side of its median range. However, looking at the prospects that the company has within the decorative paint segments definitely there is a scope of improvement in input utilisation level across at plants. Decorative market seeing improvement with the home market seeing improvement should see gradual earnings growth.”
“On the other hand probably the industrial market that Asian Paints also caters to with improvement in the OEM activities specifically on the auto side that will see some amount of respite as well. But the results were a little bit disappointing. The margins were way below what the street was expecting and the volume growth was way below what the street was expecting. But with crude cooling off probable impact of EBITDA margin expansion could be probably seen. So at least from an FY16 perspective it is looking expensive from a valuation perspective. If one has a horizon of 2 to 3 years then the stock can show marginally improvements in earnings,” he added.
“In State Bank of India (SBI) at the current juncture, the follow-on public offer (FPO) is something of an overhang. The result is very impressive, the gross slippages which came at 2.45 percent and net interest margins (NIM) was stable. Again the kind of restructured assets that the bank was probably looking at and the pipeline of Rs 5500 crore is quite manageable considering their balance sheet size.”
“The restructured books at Rs 66,700 crore odd and the current account and saving account (CASA) ratio which lies around 42.6 percent that will fuel the next phase of growth. So our perspective is that the fund raising will actually help in getting the earnings accretive scenario for SBI and with that possibility return on assets should improve to 1 percent and the return on equity should probably improve to 16 percent. So one can look at buying SBI on declines from the current levels and probably hold on to the stock. We are very optimistic on this stock.”
“Within housing finance companies LIC Housing looks far more appealing to us. The structural rate cut cycle which RBI has initiated, the cost of borrowing for companies like LIC Housing Finance will improve their earnings profile quite drastically. Again the kind of retail book that LIC has with a stable asset quality, the earnings profile should improve over the next few quarter. On a price to book at around 2.5-2.6 times not too expensive, so LIC Housing on declines can also be looked at by the investors with long–term horizon of at least 12-15 month,” he said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
