Even as a drawdown in Indian and global equities continues, investors Gurmeet Chadha and Safir Anand find value in certain stocks and themes.
In a Twitter Spaces conversation with BQ Prime’s Niraj Shah, the two market veterans listed the stocks they prefer and their rationale.
Chadha said he would value risk-reward ratio on paying a reasonable price and seeing opportunities across the spectrum. “To my mind, the opportunity could be in Tech Mahindra or State Bank of India or a large private bank, I wouldn’t make it large cap versus mid cap.”
Reliance Industries: There’s lots of value unlocking left with new-age businesses coming to the fore and separate listings for Jio and retail.
ICICI Bank: Expects pickup in net interest income and fee income.
IDFC First Bank: Chadha said he “wouldn’t mind” looking at the bank despite a lot of work being left even four years after the merger. He’s “tempted” because it’s available at 1x price-to-book value ratio.
CDSL: Only monopoly-listed play; grows despite current market conditions.
Laurus Labs and Divi’s Labs: Top stock picks in contract research and manufacturing services, active pharmaceutical ingredients in the pharma sector.
Banks over housing finance: The arbitrage between housing finance companies and banks is “diminishing” with the Reserve Bank of India continuously coming up with new norms whether it is related to capital adequacy or provisioning.
Constructive on housing cycle: Real estate quarterly updates have been good in the last three-four quarters. “If we don’t see a big recession, there are early signs of a housing-led capex cycle.” Constructive on building materials, cable and wire names, sanitaryware names, paints too once crude starts coming off highs. Fast-moving electrical goods such as Havells Ltd. and Polycab Ltd. are also being looked at because balance sheet is lighter, return ratios are extremely strong.