In an interview to CNBC-TV18, Prakash Diwan of Altamount Capital Management shared his readings and outlook on specific stocks and sectors.
Below is the verbatim transcript of Prakash Diwan's interview to Latha Venkatesh, Sonia Shenoy & Anuj Singhal.
Sonia: The rally that everyone seems to be talking about lately is the one that has come in the smaller private sector banks. Give us your thoughts on that and any favourites there?
A: Once the rally comes in, it always starts feeling that we have missed out on it and the momentum is making things look too expensive but in this whole thing on consolidation for banks especially the smaller banks is definitely a huge opportunity whether you go by what is doing rounds in terms of ICICI Bank and Karnataka Bank, DCB Bank and HDFC Bank, all those things keep on floating around but importantly look at the size of some of the banks, look at the geographical spread and they will have to get together to make things look positive. So if State Bank of India (SBI) has done it with its subsidiaries, this is going to spun next round of consolidation in some states.
However, buying at early stage, probably doesn't make sense till the contours of their entire process is out but you could ride the momentum. For trader, it's a wonderful bet, play safe and buy some like Lakshmi Vilas Bank, Oriental Bank of Commerce. So those are definitely good trading bets but on long-term basis I wouldn't want to start picking them in my portfolio.Anuj: The other pocket where you have this feeling is metals. Still buy or wait for decline?
A: Metal rally - we had a belated start in India when the commodity market already given a leg up to most of the core base metal stocks. The only plays which seem fundamentally worth gathering and accumulating at lower level also would be Hindustan Zinc at best.
I do not like Vedanta because of the merger impending with Cairn India. It is going to be very confusing of what value to put at such a natural resource giant, something or the other will keep on dragging it down and pulling it up, so it's confusing but out of the entire big names Hindustan Zinc is the only one which I believe fundamentally will continue to give some operational benefits apart from all the news flow that surrounds it.
However, smaller names -stay out of it. Ferrous - stay out of it because there is no demand on steel. We are talking about everything looking good but it has been relative to China. How long can you feel good if the neighbour's house is on fire - so there is nothing much you can do.Sonia: A word on Ambuja Cement's numbers?
A: The good thing in those numbers is if you dissect the cost that they have been able to keep, it's probably the most efficient and lowest in larger peer group and that is probably resulted into better than expected EBITDA. However, the street gets worried about things like headroom for growth; the volume growth doesn't give that confidence as much as valuations have raced ahead. So, this is a sector that has moved faster, the numbers would justify and if you have to go with any of these largest players, it will have to be UltraTech Cement given the kind of huge capacity ramp up that is underway.
However, I would not look at Ambuja after these numbers because they have been slightly better than expected.
For entire interview, watch accompanying video.
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