In an interview to CNBC-TV18, Mayuresh Joshi of Angel Broking shared his readings and outlook on specific stocks and sector & Nikhil Kothari of Etica Wealth Management answered few personal finance queries.
Below is the verbatim transcript of Mayuresh Joshi's interview with CNBC-TV18:
Axis Bank
We are expecting a strong earnings growth over the next couple of years 21-22 percent for Axis Bank. Clearly for the results gone by, the net interest income growth has been in excess of 20 percent, the non-interest income growth excess of 21 percent and again the kind of slippages and restructuring that the banks was talking at the beginning of the fiscal a target of close to Rs 6,500 odd crore, the actual number came at around Rs 5,500 crore, a substantial improvement in that front.If you are looking at credit costs of around 80 bps going forward but that will have a meaningful impact when it comes to the earnings, so we are expecting a meaningful increase, both in terms of return on assets and return on equity for Axis Bank over the next couple of years, so the operating leverage benefits remain with the bank. It is one of the preferred banks in the private space, so definitely hold on to your existing stock if you want to average more, four-five percent correction from the current levels over the next couple of months, that is the best way to approach this stock to accumulate it over the next two to three months but again we remain extremely bullish on this stock over the next 12-15 months and our target stays at Rs 681.
Syndicate Bank
We remain optimistic on the private space. Axis Bank, ICICI Bank, YES Bank is something we continue to like. But again on the public sector (PSU) side, if one really looks at the numbers, it was a mix pack. Now, particularly about Syndicate Bank, the numbers were on the softer side. Net interest income (NII) growth was just a percent. The profits came at Rs 417crore. On a comparative basis, it was around Rs 409 crore, so just a muted performance there. On the assets quality side, the gross non-performing assets (GNPA) came in at 3.13 percent. The net asset ratio again came in on a higher side. So clearly, you are seeing pressures coming through and the management was also very clear that the industrial segment and the agricultural segment accounted for a lot of slippages that you probably witnessed in the pipeline in terms of slippages also looks a little bit soft. So, soft numbers expected in terms of asset quality for syndicate bank particularly. But what probably hinges is the kind of upgrades and recoveries the bank is able to do. They were successfully able to upgrade around Rs 767 odd crore of assets under consideration. And the valuations are on the lower side. Based on the valuations and the kind of capital raising that one is hearing about of around Rs 2,000 odd crore, it should be very lucrative going forward. Though, they sit on around 10.54 percent in terms of pure card. So, one can hold on to the stock with a 12 month time horizon. We have got a target of Rs 125 on the same.
DLF
From DLF strong set of numbers expected but if you look at the business fundamentals of the company, weak pre-sales, the key markets, it operates out of Gurgaon and Noida are already seeing huge amounts of supply come through. So they are already sitting on a huge amount of inventory. Pre-sales are weak, no new launches that are probably come through in the quarter gone by. So, they are struggling when it comes to their core businesses. And what ideally the market would see is how their rates listing if it happens, how probably the de levering story is going to play out. They have got their own sweet issues with some regulatory concerns with related to Competition Commission of India (CCI) issues with so on and so forth. And again, on that Noida mall, there are some issues again in terms of the certain these certifications. So, the company is struggling. The pre capital simply are not being seen in the company. So, I clearly suggest that you should exit the stock on rallies. As an alternative to the real estate which I have been liking over a period of time is the non-banking financial company (NBFC) space. LIC Housing has posted a strong set of numbers. In our opinion asset quality as help up and clearly the spreads should start stabilising and increasing once the cost of funds start coming down. So, once incrementally, the cost of borrowing comes down for LIC and the kind of share that it got in the retail market plus the kind of additions that it probably intends to do on the corporate and the Lap side of the portfolio, that should be value accretive and margin accretive as well. So, on a price to book comparison, quite attractively valued at the current juncture. So, an alternative investment should be LIC Housing Finance. We remain optimistic on the stock. Our target stays at Rs 612 over the next 12-15 months.
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