In an interview to CNBC-TV18’s Anuj Singhal, and Sonia Shenoy, Deven Choksey, MD at KRChoksey Invst Managers shared his readings and outlook on market and specific stocks.
Anuj: First, what are your thoughts on Yes Bank and the kind of demand that it saw for the QIP at Rs 1,500 per share -- not just on the Yes Bank stock but also on the overall banking stocks, do you get a sense that they could continue to lead this market?
A: Yes and that is more pertinent. I think the entire banking space is basically showing an extreme level of promise from the point of view of getting into the higher level of growth in the economy. In interactions with most of the banks, I think what are the basic approach most of the banks are adapting is they are extending the faster amount of credit on one side to the retail customers but largely I think with the emergence of some of the large projects, I think the banks are getting ready to expand the credit portfolio significantly and that is where you are seeing the capitalisation process also taking place in order to take care of this particular opportunity.
We get a sense of around 25 percent kind of a credit growth I think for some of the corporate banks, private sector banks happening in the coming next two to three years’ time. So, that gives you a relative amount of confidence that the engine is basically firing at full power as far as I think the economy is concerned and the banks are participating. So, obviously the investor appetite is more towards adding into the banking space to capture this particular growth in coming three years or so.
Sonia: Particularly on Yes Bank, what kind of upsides do you see say over the next 6-12 months given that now even valuations have become attractive post the QIP?
A: You are right, I think the valuations remain attractive. At the same time, I think the opportunity remains on a higher side. The bank is promising to grow 25 percent CAGR over next three years’ time, so, certainly I think the opportunity would be on the buy side. I don’t know what price I would attribute immediately to, but I feel the stock could easily range in a trading range of around Rs 1,300-1,700 over next 12-15 months’ time.
Anuj: What about the rest of the market, where else are you comfortable buying at these elevated levels?
A: I think the preference would clearly go towards some of the quality banks and the NBFC. However, apart from that, the larger amount of confidence stays with some of the auto companies. We find strong tractions happening in two wheeler space. We are also finding the traction in the farm equipment space and the commercial vehicle space. So, certainly I think this areas are remaining attractive.
Fortunately I think some of the companies are available at a valuation within this space at a far more attractive level currently. Look at the valuations of Bajaj Auto, look at valuations of Tata Motors, I think they remain quite comfortable at current levels, so, one gets an easy comfort and the downside protection on the risk for calculating I think 25 percent kind of upside over the current prices on next 12-15 months or 18 months in some case.
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