Tcs share price: IDFC Bank is a good bet: Daljeet Singh Kohli
What is your IT pack strategy? You have three big issues coming out on the same day – January 12 – TCS, Wipro and Infosys, and HCL Tech after two days.
All four are present in our different portfolios, some for the long term, others for the medium term. TCS, we liked for a while. In the last 2-3 months it has underperformed a little bit, and after the previous results the market was not very happy with the results, but TCS is such a company that the quarterly results in the long term pattern shouldn’t matter too much. many. In fact, any underperformance allows investors to add those stocks, which is exactly what we also did in those two months. We are positive on TCS. Among the IT midcap, we also have quite a few names – KPIT, Birla Soft, Persistent, Mastek. So most of them are there in some of the other wallets. We are definitely overweighted and IT is probably the only sector that has been holding up since last year. In 2021, we were overweight IT and in 2022 we also continue to overweight IT.
What is the reason the banks have made a comeback? Was it just the technical factor in December? The IFIs were selling and falling, the sale of the IFIs stopped and the banks made a comeback.
Technical factor aside, the pre-quarter numbers given by some of these banks and NBFCs like Bajaj are better than estimates. They show that the stress, which people thought, is probably not as great as it might be claimed.
Banks have not performed in the last few months, almost from August they have not performed at all. So he was late at one point. Some catching up would have taken place with these pre-quarter figures. This gave some confidence that the quality of the assets is probably not that bad. Growth has not deteriorated either, although it is not very good growth – it is according to estimates. The real uptrend will come once people are confident that this rally continues and that growth momentum continues with all of these financial factors.
Finances will take a bit longer for consolidation and we have one or two private banks – HDFC Bank and
in our portfolios, but they have lagged behind. ICICI Bank did even better, but HDFC Bank lagged behind, but we remained confident as financials represent 30% of the index. If this sector plays out, then at some point those actions will play out as well.
How do you see the restructuring of IDFC and IDFC Bank? Is there any money to be made for the shareholders of IDFC Bank?
I don’t think so immediately. It is the reverse for the moment. IDFC was trading at a haircut, and so once that clarity is provided it will obviously depend on the type of swap ratios etc, but at first glance it looks like IDFC was trading at a haircut against the bank.
While we don’t hold any of these items in our portfolios, we are more optimistic about the bank and ultimately in the long run the bank will survive, so obviously it’s a good idea to have if someone wants to buy it and keep in the portfolio for three years, five years, then obviously the bank will be the thing but in short, eventually if someone is just looking for an opportunity or some type of business then probably IDFC Ltd will fit in if not, for the investment, IDFC Bank is a good bet. It grows and it has shown the information on how it will develop over a period of time, but obviously these things take a lot longer and sometimes the market gets a little more anxious. This is why things don’t go the way they want or in between, some quarters or years when growth is lackluster or APNs are a problem, but you have to keep the faith, and we have strong faith in it. management of IDFC Bank. . But we didn’t add it to the portfolio as it will likely take a lot longer to reflect in the share price.
Newly listed Sapphire is up nearly 5%. Jubilant Food also had a strong rally on Friday. What’s your decision on Sapphire, which also hit a new high in 52 weeks today?
We are not very positive on the subject of consumption as such at the moment. We believe that involvement is the biggest enemy of consumption, and all of these companies will have the problem of passing on all kinds of cost increases. Most of these companies are under pressure for margins and maintaining those margins. These fast food restaurant companies, they always sell at really high multiples. So they don’t need too much headroom for you. The numbers for this quarter will be good as you are in lockdown for the New Year and everyone must have been partying. Therefore their sales would have increased and the numbers were improving, but these are very short term and these trade shocks we would stay away from these type of companies in terms of valuations and in the time we will see. as the pressure on costs, etc. .
Are the markets now convinced that the peak of the virus will be soon and which means that wherever we see a little bit of selling because of the third wave these stocks need to be reviewed, be it PVR, Inox, Indian Hotels, aviation actions, leisure actions, travel actions, fashion actions?
The market probably thinks that this variant is not as deadly and that it will not have too much of an impact on the economy. The successive phases will have a much smaller impact on the economy because people have figured out how to live with it.
Obviously, the same news can’t have a similar impact every time. It’s the only thing that makes me feel like we can buy these stocks. Although for the PVR we cannot say that they are in the value area or that they have come out very strongly. In fact, they’re almost close to where they were at pre-pandemic levels, so they’re not giving you any benefit from this wave or anything. People are just buying for commerce or something that’s okay, but for investment I think we should either buy it when it’s available 30-40% cheaper than their pre-pandemic price or something. something like that if not, it is useless. There are so many sectors that are in an uptrend, so why look for this stuff where there is so much volatility.
How do you see this market today in terms of medium and large stocks?
We are always agnostic by industry and by market capitalization. We take only company-based calls – specific calls to stocks and, accordingly, we choose them for our different types of portfolios. So there are portfolios that are in a kind of dynamic quite where we are looking for a six month view, less than a year and then there are portfolios for 1 to 3 years and then 3 to 5 years like that. Accordingly, we select the stocks. Fairly spread, most portfolios are evenly split between 30-40% in large caps, 50-60% in mid-caps and 20% in small caps or even less than that. multi-bagger ideas that won’t come from over-sought after areas. We will have to look for something unique, which will take its time. In 2022, in our note for the year, we wrote that the major indices will give all the returns they will give, without expecting major returns, maybe 8-10% is enough, but you can always make a lot of money by choosing the right industry and the right stock. The emphasis is on that.
How would you look at new age listed companies where profits are low, market cap is high and the old age company where profits are high but market cap is low. How to separate and adapt to these changes?
We haven’t added any to our portfolio.
we had added a few months ago, but immediately moved also after a few months. So we’re on the sidelines and figuring out how to adjust and try to understand valuations. Now this is a big dichotomy for Paytm, there is a market that is unwilling to give a valuation or not to look at this positively, and at the same time there are so many other companies out there. a similar space and which give enormous values. So I think everyone is wondering right now what is the right assessment or what is the matrix. We’re in that same space as well, so we haven’t added any of these items to our portfolios.