Jani also said: “I see merit in buying into the names like Adani Green which is showing remarkable resilience. People can have their own views and doubts about what kind of growth they will deliver. But given the momentum and theme in India, I do see a case for a 20-25% kind of an upside even from the current price point.”
I was looking at some notes this morning and there has been some interesting initiation on Cello World with an upside of almost 31% and apparently Castrol also held its analyst meet and people have come back a bit more positive. Do you have a view on either of these names?
Hemang Jani: Castrol has seen a very strong bounce back in the last four to six months and one of the reasons is the way the company has restructured and reorganised its business and also the fact that some of the new initiatives that the company has taken in terms of new products. I think the market has liked those. It has been a very slow moving kind of a stock for a while, but because of this new initiatives, the market is liking that.
Given the pedigree, the brand, the distribution, though the stock has run up, there is still some more room on the upside. A 15-20% kind of an upside is possible. Remember, it is a dividend stock with a 3.8% kind of a dividend. So, surely a positive view on Castrol.
Just wanted to get some largecap calls that you have, any buy recommendations?
Hemang Jani: In largecaps, we have a positive view on banks. Given the underperformance of the Bank Nifty versus Nifty in the last 12 months and the fact that the private sector banks have underperformed big time versus their PSU counterparts, we do see a lot of value in names like ICICI Bank, a smaller name maybe a Federal Bank. This is one pocket where we do see both growth and valuation comfort and some of the other names like L&T after numbers had a cut of almost about 4% to 5%. But given the growth outlook, the position that it has in the Middle East is boding well for L&T at this point of time.
In this market of chops and churns, which is one stock you are buying and plan to buy and will buy today?
Hemang Jani: Real estate is a space which has gone through a bit of a consolidation and when we look at the incremental data points in terms of new project launch, the fresh sales, they all are looking good. So, we could look at two companies, Mahindra Lifespace and Anant Raj. These are the typical midcap companies, not very large market cap companies and in terms of numbers, in terms of valuation, there is a comfort. So, if I have to participate for, let us say, next about 6 months to 12 months, I would surely go with these two names with a more than 18-20% kind of an upside potential.
What is your view on the paint sector? Asian Paints is saying we are ready, we are used to competition. Grasim is saying we will shake them up. One will get it right, one will get it wrong.
Hemang Jani: What market is going through currently is more of a certain narrative and hype around the Grasim launch. No doubt, there is going to be a little bit of a challenge for Asian Paint which always had a very dominating kind of a position in the paints business. But if you look at the basic business model, the distribution, the brand, I do not think there is going to be too much of a damage that can happen. If the market is growing at a certain pace, remember that Asian Paint is clocking volume growth of north of 10% to 12% consistently. So, as long as they are able to deliver volume growth using their business model and reach, I do not foresee much of an issue. In fact, if you see a further, let us say, 3%, 4%, 5% kind of a cut, you should be buying Asian Paints. I do not think we should get too negative because of the new player entering into the frame. Bharti people had doubts when Jio was launched and what exactly is going to happen and all that. But we all know that they held their ground well and what happened is a history. So, I think we should not get too much carried away by the hype.
What is your view on the entire power supply chain? India has raised its forecast on peak electricity demand as the electricity consumption continues to gain pace. They are now talking about a 384 GW consumption through March 2032 and this is a 5% increase versus what they had indicated earlier. Within the power ecosystem, which are the stocks that you like?
Hemang Jani: Though we have seen media reports that the green energy, renewable energy worldwide are now 30%, in India we continue to see that some of the companies continue to trade at much higher multiples and continue to go up. So, purely from a thematic perspective or momentum perspective, I see merit in buying into the names like Adani Green which is showing remarkable resilience. People can have their own views and doubts about what kind of growth they will deliver. But given the momentum and theme in India, I do see a case for a 20-25% kind of an upside even from the current price point.
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