Well put and we have just started. Look at the US markets. It is on a roll. Bond yields are down from 4.95% to 4.65% and looking good for more. The dollar is weak. China is rebounding. And why are we sulking? It is the index now. And like you rightly put it out, on any fall, REC, PFC, BHEL make new highs. So I am of the opinion that we are just passing time and consolidation is very healthy for the market. But the real action will start today.
I think we are headed to 19700-20000. Fingers crossed, maybe 20,000 by Diwali. The fall was more to do with a lot of factors accumulated. And now the rise will also come in sync with that. You cannot have midcaps make new highs and the index do nothing. The valuations are playing catch-up. Whether you look at banks, how long can HDFC Bank underperform? ICICI, Axis numbers have been far ahead of the Street. PSU banks have taken the market by storm.
It is going to be metals, banks, and construction and autos which will drive the market higher. So cheers to a new sparkling Diwali which comes next week. I am very bullish on the market.
Godrej Properties has been one of your stocks. I remember when it fell from what, if you could pull up the last one year or two year chart from peaking out around 2500. It fell to 900 or 1200 or thereabout. There was a lot of panic on the street. You had, I remember, started talking about it around 1200. Now it is 1700. Are you still bullish on this one?
Yes, you are right. I have owned Godrej from Rs 350-400 in the last five years. And it is a personal thing, as a disclosure. I believed in management. I believed in the outlook. I believed in the pedigree. You can yourself see, you know, smell the coffee. At Rs 1100-1200, the second largest player in the country was available at the weakest valuation. And now you are just raring to go.
DLF numbers, Godrej numbers, plus the effect of wealth is humongous. Close to where I stay is Camellias, DLF sold a 10,000 square feet house for almost Rs 100 crore. Maybe Rs 100 crore is an aberration, but still Rs 70-75 crore is the rate. So real estate is taking the market by storm in the sense, fixed assets are doing well. And it is always going to be pedigree players who will lead the pack because people have had enough of errant builders who have taken the money and not performed.
Godrej has been an outperformer along with DLF and it is just to tell you they are hitting new highs at a time when the index is doing nothing which is telling you where these stocks can go if the index starts to go to new highs.What about Tata Motors? Numbers are overall in the good direction and margin guidance is towards the positive. But the second deal of the EV business which the market was expecting so far, probably a 20% premium to the previous one, has not happened. Are the positives priced in and or even at these levels, are you okay with Tata Motors?
Well, they are three parts of the pie. One, the stock has run up fairly strongly from Rs 390-400 levels where we were very bullish. B) A large part of the earnings will get into the prices. C), Look at the business model of both Mahindra and Tata Motors. The EV market in Nexon is only gathering steam. China seems to be on a very strong comeback, which is why metals and autos, particularly will do very well there.
The spread of other products which they have are actually expanding and that includes Europe and the other markets. Their global portfolio is good. Locally, we are in the sweetest spot. You have seen auto lenders, auto stockists and everyone ride their way along with the OEM chain. So Tata Motors is a must-have in a portfolio, whether you buy some now or lower. I am looking at a target closer to Rs 800 which can come before the budget.
I also think Bajaj Auto, Hero Moto can be really the stars of 2024, given that they are coming on a low base. And the rural incomes have started to pick up. But Tata Motors is a must-buy now and on any decline.
What is your take on Zomato? The stock will come out with its earnings. Anything that we should specifically watch out for?
The real icing may have taken place in the Rs 50 to 100 run-up, but I still think it has got miles to go. As a disclosure, we own this stock in our portfolio, which has been a contrarian play and played out excellently. Paytm, Zomato and PB Fintech are here for the next many years. Like you pointed out, numbers will have to justify the valuation. It is not a cheap stock and earnings will take time to come. But you cannot track this stock or this fintech business on a monthly or a quarterly basis. You have to give them more time.
As you are aware, their margin expansion and their reach is getting bigger. The eating habits or the QSR space is very attractive. As a disclosure, we have a buy on this stock. We own it. Paytm, PB Fintech and Devyani International are four of our top picks.
Is the zing out, are best of the gains for the year in some of the railway stocks, is that over?
Well, I was just seeing the presentation of Jindal Steel and the market was disappointed in numbers. I was also not aware the biggest supplier of head hardened rails is Jindal Steel in the country and they are talking of metros in Ahmedabad, Surat, Chennai, Indore, you name the city. And they are saying their order book is the strongest ever in the history of the company. So I think that railway stocks, metro stocks, these ancillaries have miles to go.
Yes, they have run up a lot, but I am extremely bullish. I would advise investors that if you have the option, take a look at this Jindal Steel, JSW Steel. Steel is going to be the real killer in the next few months. We have these issues in Ukraine and now the Israel-Hamas conflict too. Sooner rather than later, commodities will pick up. China is on a rare comeback. But in India, the consumption, particularly railway and defence, will mean that conduit players, which are input costs, will do very well.
The presentation of Jindal Steel and JSW will amaze you. I am extremely bullish on certain names in the railways. And I think that there is still much more upside. IRFC is one of the preferred picks. The numbers are very strong, it has no debt and it actually gets yields at the highest and its cost of money may be the lowest in the PSU pack.
Did you manage to catch the results of Kiloskar Oil Engines? This is the second or third result they have posted after that analyst meeting. The first one they had in 10 years and numbers appear to be falling in place.
No, I have not had a look but we have had a coverage on this stock much lower. The stock has been zooming and that is more to do with the Kiloskar Group’s re-rating on a lot of sectors, particularly the brand ownership of Toyota which they have here on the franchise. Kiloskar is an under-owned group, Kiloskar Pneumatic is one stock we own, I have not had a look at Kiloskar Oil.