In an interview to CNBC TV18, Gautam Trivedi of Religare has discussed the stocks that he is most bullish on from a bottom up perspective:
Ashiana Housing is a great story. It is the only listed pure play – mid-income housing company. They have projects in cities which are tier II and tier III like Bhiwadi in Rajasthan. They are in Lavasa where they have build the first ever senior citizens home again a very successful model. They are also present in Jaipur, Jodhpur and Jamshedpur and Halol in Gujarat. So, they have ventured out into interesting cities and towns.
The other one we like is a Sanghi Industry which is a cement play with capacity to go from 3.1 million tonnes to 4.2 million tonnes by early next year. On Enterprise value/EBITDA it is only 4.5 times which is extremely cheap within the midcap context. For Sanghi Industries, our target price is Rs 90 and the stock is at about Rs 44-45, so we have nearly 100 percent upside on Sanghi Industries. That is one stock which we believe strongly will do very well. Cement as a sector we are overweight on anyways.
Ashok Leyland has been reporting stellar numbers for its medium and heavy commercial vehicles. Now why would anybody buy a 30-40 tonne truck if the underline business in the economy was not starting to grow? Again the numbers are not huge but the fact is you have seen three consecutive months of Ashok Leyland posting stellar growth in their medium and heavy commercial vehicles.
Though Ashok Leyland has already given returns of around 200 percent on a year-to-date basis, we have not seen the best. In fact our target price remains right now highest on the street at Rs 65. We identified the stock back in November of last year when the stock was trading at Rs 12 and the company basically incurred huge debt of about Rs 5,500-6,000 crore putting up a brand new spanking facility in north India. But the problem was the commissioning of the plant coincided with one of the worst recessions in the country. So high cost and high debt and obviously sales were not growing. However, and decided to go about in a structured manner to reduce the debt. They began selling assets, they cut cost in terms of number of employees, they also took pay cuts across the board, the senior management took 20 percent pay cut which is remarkable, you don’t see that happening very often in corporate India and they made a very consorted effort and a timetable of how to reduce their debt which they started delivering on. So now you are looking at the company where the debt is coming off, the underlying economy is showing signs of revival, for the past three months, they have had stellar medium and heavy commercial vehicle (MHCV) sales and if the economy continues to rev up and growth comes back to 7-8-9 percent over the next three years, the stock undoubtedly will do very well.
The big move already on PSU banks is for a very specific reason. If the government is indeed looking at divesting and bringing the stake down to 52-51 percent then that is a specific case. But the preference from an institutional investor perspective still remains largely with the private sector banks. If you ask the average fund manager be it an FII or domestic, the interest largely remains in private sector banks because they are concerned about the NPL issue at the PSU banks.
Oil and Gas stocks:
We like the oil and gas space for the most part, every drop in the price of crude oil globally means less subsidies and that is better for ONGC. So we like ONGC, we like even now at these levels BPCL and HPCL. So we continue with that.