India is there for the asking, extend time horizon; 5 stocks to buy now: Sanjiv Bhasin

Sanjiv Bhasin, Director, IIFL Securities, says the first choice would be Reliance. I have been talking of Devyani International from Rs 190 levels. I think Starbucks' dominance is now going to Costa Coffee. SRF can be a dark horse. SBI Cards will be one of the best players on the festive season and lastly would be IEX.

Are we going to be dancing for the markets as well this week or not?
We are going to dance all year and the next many, many years. The stock market is just an indicator of the atmosphere, the happiness and the positivity. So thumbs up. We are hitting 20,000 this week.

Absolutely. So, what is going to lead us to 20,000? Is it going to be banks? PSUs are the ones which are actually dancing for the last five weeks now.
Yes, but you need a heavyweight. You need Reliance to start to get into action. You need HFCs’ underperformance to come to a head and I agree that the bond yields and the other uncertainties are there, but take it with a pinch of salt. Otherwise we cannot have the GST numbers the way they are, cannot have the talk of bond inclusion and an imminent re-rating of India. Now, obviously, there will be volatility, but we have come to a very sweet level where the index may start to outperform. You cannot have Maruti and PNB and Bank of Baroda hit new highs and L&T and still the market underperform. But like I said, it is an opportunity. Now, what you have to do is broaden your horizon. India is there for the asking, but your time horizon has to get a little extended.

For markets to go higher, you need a heavyweight. But what could take the heavyweight higher? For Reliance, the Jio listing has happened and GRMs are down. HDFC Bank scored a self-goal by saying the next three-four quarters our numbers would be depressed. For ITC, the hotel demerger is also out. What could be the individual triggers?
For Reliance, look at the three things. You have said Jio Finance is listed, but look at the numbers from Jio and Jio Fiber. It is a new entrant and it is raring to go all across. You are going to get 5G across the board. The real beauty of India is in the smaller cities. Go to Ludhiana or Jalandhar or Amritsar because there the momentum, the tempo is so high and that retail flows are giving me enough confidence today.

Secondly, Jio Fiber. Thirdly, Russia has stopped exports of distillates, now that gives a huge opportunity for OTC which has not done much to come back. And fourthly, retail. We are at the cusp of the festive season. These 14 days are the Shradhs, which in the Hindu calendar, 15th comes the first Navratra, the World Cup, we are not even talking about that, and our medal tally at the Asian Games– where are the positives hiding?

Coming to HDFC Bank, this has been a bank which always underperforms and over delivers, just like Infosys used to do. They have tried to plateau the returns over a period of time, but look at the branch expansion. You will not get an opportunity to own the 7th largest bank in the world, unless there is some uncertainty. Bad news is always a good time to accumulate very good stocks.

Thirdly, Lever and ITC have been more or less range bound, but maybe they can look to humming again. TCS is coming out with a dividend on the 12th. Results should be in line to be better than expected. TCS, by the way, hit a 52-week high in all this humdrum of negative news. So, enough triggers to take us higher.

Now: Yes and just taking a look at the scorecard when it comes to the auto sales numbers, what have been some of your key takeaways?
We are at the cusp where auto sales are now streamlining their logistics, the supply chain, the semiconductor and demand. Someone told me that he had booked a Mahindra vehicle. He said he was offered delivery after six weeks. But if I could pay for accessories, I would get it within one week. The accessories are worth 60,000. So, Mahindra's making money hands over fist, whether we like it or not. They are not going to come on TV and say that.

Maruti numbers show 1,83,000 dispatches. Believe me this will go up to 2.5 lakh in the next six months. They have an order book of 35 lakh vehicles.

By the way, oil has corrected almost 5% and according to me, oil is going to further slip. You cannot have it both ways. You cannot have the US Senate pass the bill not to get shut down and yet yields go higher. I think this is the last of the pessimism maybe in the US and in India, it is giving us an opportunity.

What is on your buy list right now? If you could give us three stock ideas?
Firstly would be, obviously, Reliance. Then, I have been talking of Devyani International from 190 levels. Now, I will give you a simple process. Also, I think Starbucks' dominance is now going to Costa Coffee and my wife particularly likes the carrot cake and so on. So that preference for change is coming. There is Pizza Hut, Kentucky Fried which is not only a chicken and is also catering to the vegetarians. Their outperformance will now come vis-à-vis the Jubilant and the others. Plus, with the added advantage of the festive season, the World Cup, Devyani could be my dark horse.

Then, look at a share like SRF. It is the largest player in fluorochemicals and the largest single supplier to Bayer and one of the largest crops. We think the agrochemical underperformance may be coming to an end but you are getting SRF at a very sweet multiple. China, sooner rather than later will get over Evergrande and other things and come back and I think SRF can be a dark horse.

Then, I have talked of SBI Cards which will be one of the best players on the festive season, the spending, and their liability franchise being fixed, the margins will be very sweet.

Lastly would be IEX. I agree that there is going to be a little bit of competition but you cannot ignore a company which has 93% market share 85% EBITDA and where volumes will be actually 10, 15, 20 times in the next three-five years. So, IEX or closer to this 130 is a must-have in a portfolio.