Safir Anand And Gurmeet Chadha's Discuss Stock Ideas Amid Current Market Volatility
Veteran investors Gurmeet Chadha and Safir Anand still find value in certain stocks and themes in the current volatile times.
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.
Gurmeet Chadha, Managing Partner, Complete Circle Investments
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 ventures.
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.
Safir Anand, Veteran Investor
According to Anand, the persistent foreign selling might taper soon. “On one side, they’re selling equities but participating very aggressively on the private equity market. With the currency move and portfolio erosion, the outflows may taper.”
Reliance Industries: Markets are overlooking the fact that the price-to-earnings ratio ascribed to the refining and oil business globally is way lower compared to the ratio ascribed to telecom and retail where Reliance is moving into new products. To that extent there is some level of rerating just because of the nature of the business-change that is coming in, and also it moves out of regulatory issues into more of growth and opportunity.
Banking: Continue to be very vocal about banking.
Aquaculture: Comes within food, and “I find that there’s a world shortage of food. It’s non-discretionary and it’s simple mathematics and there is a world shortage of food and we still have to eat food. China was doing fishing activities that are being frowned upon from an environmental perspective so that, according to me, is a good sector and all the three players in that sector have guided very well”. The stock prices have corrected, so there’s an opportunity.
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