One of the stocks you own – RattanIndia – has had a massive run. Is it time to book profits in RattanIndia or should one hold on?
Profit is the prerogative of the buyer. From Rs 9.5 to Rs 14 in two weeks, that is called a 50% gain. I still think Rs 18 is achievable. But if you are in a hurry, you can do that and celebrate your big profits. But we still think it is an undervalued stock. Coming to the PSU basket, two of my top picks are hitting new highs – Ircon and Engineers India. I think in the next two years, they can double from here. But I feel there is at least a 50% upside in this year itself.
You have seen the results from RVNL. Ircon is arguably the best play there. Engineers India on the OMCs is the electrical part for hydrocarbon and engineering. And these are debt-free companies. So, you can imagine the potential there is. I think they are going to hold a huge upside potential.
Apart from the names that you talked about Engineers India, etc, is there anything else that is coming up on the radar? What about Vodafone Idea? Is it time to book some profits or do you expect it to move further from here on?
Do not book profits till it hits Rs 25, that is my hold for the one-year call. It will hit 22 to 25 maybe this year or next year. My top pick today is Embassy Office.
Real estate is going through the roof. Embassy Office has almost 35 million square feet of commercial real estate. They have just bought 5 million square feet in the southern region, and 8 million square feet are under construction. They have more rental property than DLF. And I think that commercial rates are headed upwards with a big-big positive. And this company is going to be the biggest beneficiary. Rs 338-340 is where we are saying it could rise to; you could see Rs 450 even on Embassy Office.The second pick is Wipro. It is one stock which I can easily see even scale Rs 700 in the next one year. Simply put, they have signed three agreements or entries with Microsoft. In the long run, there can be some capital development which makes Microsoft take a stake here. And in that parlance, Wipro will be the most sought-after stock in the next one year. In the medium term, it can hit 500 or 520 level.And last but not least, AB Capital is one stock which has really been on a tear in the last one year after not doing anything for 10 years. As a group, AB Capital is actually forerunning what the group has done and that is raise capital well and deploy it. AB Capital, according to me, is going to hit 350 in this year itself.Have you looked at Zydus Life at 1100?
Yes, Zydus is one stock which in the pharma basket is doing very well. Zydus and Lupin are set to go to new highs. It is not a cheap stock. It has already moved up quite a bit. But the guidance is very positive. Locally, they are one of the biggest players and I would again go with Lupin on the generic side in the US. Their pricing power is back and both these stocks can be relative outperformers in the pharma space.
You have been a follower of Zee also for some time. Has it disappointed you?
Yes, both Zee and Paytm were big disappointments. But we looked over, booked out and got into better names. We still think Zee is an avoid. You cannot have this type of ruckus which was created by the management. Two years, you misled promoters, bankers, and creditors and in the end, it came to be a damp squib. I think the environment has changed. The new deal which Reliance has got into is a very big positive with Disney. And for them, the cost overrun means the return on capital, and return on equity will be very very difficult. So, I would say to avoid Zee.
