In an interview to CNBC-TV18, Kunj Bansal of Centrum Wealth Management shared his readings and outlook on specific stocks and sectors.
Below is the verbatim transcript of Kunj Bansal’s interview to Anuj Singhal, Latha Venkatesh & Sonia Shenoy.
Latha: Will you buy Indian Hotels Company?
A: At the outset I am not, in terms of Sebi’s guidelines, ready with a view on Indian Hotels but having said that if I look at these businesses in general most of the hotels and some of the hospitals, these are high capital requiring businesses. If we look at their return on equity and return on capital consistently over the last quite a few years, let us not even take a short-term view, have been in single digits. So, to that extent these companies or these business models are not even able to generate the cost of capital that they are supposed to. To that extent irrespective of the short-terms ups and downs or the quarterly results improving or not improving, is stock doing well or not doing well, I don’t think these are the business model wherein a long-term investor needs to invest money.
This can also be seen by the long-term performance of these kinds of business models. If we look at their long-term returns, there have been hardly any, compared to any other good business models from the automobile space, from the engineering space and even from the commodities like cement space.Sonia: Lupin has fallen substantially over the last 12 months from Rs 1,900 level, maybe there is more headroom but what did you make of the positive news flow on its Goa facility getting the US Food and Drug Administration (US FDA) clearance?
A: It is a positive trigger that has happened on the company. So, earlier while we were having trend of continuous US FDA inspections and bans or import alert or things like that being issued now we are starting to move towards the clearance stage. So, company received establishment inspection report (EIR) for its Goa unit and that is clearly positive.
However, let us also keep in mind that the stock has been underperforming and falling may be largely in line with the whole trend of the pharma sector, but in general the company continues to do well. So, to that extent it is quite positive and we can see good interest in the stock. Having said that it is not one of the stocks I have a ready view in terms of Sebi’s guidelines.
Extending that discussion further one of the stocks from within the pharma sector that I have a ready view is a company called Neuland Laboratories. It also reported its numbers last week on Friday and one of the midcap pharma companies has reported very good numbers. Over the next two years we expect its topline to grow by above 20 percent annualise compound annual growth rate (CAGR) and company is available at 14-15 times forward and that for me from a medium to long-term investment is a very good buy.
Anuj: What about Infosys, fresh 52 week low but you think it is bargain buying now?
A: For the IT sector if we look at not only Infosys, in fact some other stocks more specifically the three stocks without a recommendation that I have been seeing in the 52 week low list are in addition to Infosys that you mentioned Wipro and Mindtree. All these three for the last one week at least have been on and off, on and off coming in the 52 week low list. I don’t think that we have seen the bottom for the IT industry as yet.
We can continue to see lot of headwinds, lot of pressure in terms of their business models businesses coming from the US and Europe and to that extent I don’t think it is a bottom fishing or a bargain buying kind of a scenario for the IT industry, which can be said for the pharma industry though. So, to that extent I don’t think I am positive as of now in the IT industry.
For entire interview, watch accompanying video.
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