In an interview to CNBC-TV18's Sonia Shenoy and Anuj Singhal, Prakash Diwan of Altamount Capital Management shared his reading and outlook on the market and also gave recommendations on various stocks.
Below is the verbatim transcript of the interview.
Sonia: You looked at a lot of stock results, you were talking to us about how Bharat Financials’ numbers intrigued you, was it the lost that worried you or do you think because it was a higher provisions, it is fine and this stock would do well?
A: Absolutely, so if you look at the numbers, they seem very optically misleading. It shows a loss, the loss is thanks to that huge Rs 300 crore provisioning that they have made. They have gone aggressive on provisioning which has been conservative because beyond 90 days is what Reserve Bank of India (RBI) stipulates at 50 percent provisioning, they have done it for more than 60 days kind of outstanding loans as well.
Secondly, what is interesting is the net interest income (NII) has gone up, it has gone up in a scenario where things have been difficult, they are talking about guiding about AUM growth which is 50 percent for FY18. I do not see any parameter which could worry you. So it is just that because it is a bride that is getting ready to finally be part of the Swayamvar which has been in the offing for a while and the clean up, the provisioning, all of that indicates that definitely there is something that is likely to happen. Numbers are not at all misleading but people could optically look at a loss and stare at a loss and get worried, it will be a better way to look at it from a slightly more detailed perspective.
Anuj: How would you approach Oil and Natural Gas and Corporation (ONGC)?
A: Let us look at what is happening to the oil and gas sector. Every participant or constituent in this listed space has done well in the last six months.
On the gas side, you take a Petronet LNG, you take IGL, GAIL, you take anybody who is into either refining distribution. ONGC is probably as if it is kind of standing away from all this. It is not part of the sector, it has been standing out and it has not been outstanding in terms of its stock price movement, which is where the catch-up is imminent.
Secondly, some of the other investments that they have made in the last two-three years internationally and domestically, the investments into refining capacity and especially the gas infrastructure is going to start playing out. One of the subsidiaries is MRPL. It has done 40 percent in the last three months. If you have investments, which are appreciating and contributing on sum-of-the-parts basis also, ONGC needs to start getting a relook and that is what will happen. If those refining margins are such a huge premium over the Singapore complex, ONGC may not do a Reliance thing but at least it could probably still make a lot of money given the kind of strengths that it has. So I think this stock deserves a little bit of rerating which you could probably start seeing now.
Sonia: The other stock that you have been very bullish on is Cholamandalam Investment and the numbers to me look pretty decent this quarter but what did you make of them?
A: Nothing very spectacular that deserves a re-look or more accumulation to happen and what is happening is Cholamandalam is seeing at elevated levels a lot of long funds have moved out if you see in the last couple of months because of the rally. You have 50 percent of an upside in a fund where the lifespan is probably just a year away from tenure is getting to a closure level or something and the other thing is Cholamandalam is in that space which is very clearly an economy facing so if you have a Magma Fincorp and SREI Finance and all of them getting rerated, there is no reason why Cholamandalam stays out with the kind of pedigree it has. So I think it is just a matter of time but it is good, the consolidation is giving people opportunities to buy into this.
But one set of numbers before I forget which I wanted to bring to your attention was Biocon. This is another classic where I do not know why the street is disappointed with the numbers but I think it is giving you one more chance to – this is the last boarding call to get into the stock before it makes new highs. What happened to Maruti, people who are disappointed with the results and the stock reacted and they never gave you a chance, straight Rs 200 rally thereafter. So results is getting to be a very good opportunity for the brave and the longer-term people to look at buying in and because the markets are not going to be so charitable and give you too many dips as Anuj keeps on pointing out. You get a dip, buy into it if you are a long only investor. If you are a trader, that is a different dynamics but wonderful opportunities coming through in the result season.
For full interview, watch videos...
Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com.
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!
