After an action-packed week, it looks like a little bit of a cool off is coming in today with Reliance being the one star in the market — up about 4%, We broke the story on ET Now late yesterday that Amazon is looking to pick up stake in Reliance Retail.
Yes, for quite some time now, Reliance has been holding the spurt very well and I think we have been very bullish on this stock for a very long time. In my previous avatar also we were talking about this and now also.
Unfortunately because we are a fund which is in midcaps and smallcaps and this being a mega large cap, it is not a part of our portfolio but we have been holding a very positive stance on this mainly because there are visible areas of monetisation. One part which has played out very well, beyond anybody’s expectation, is telecom. The next one is on the retail side and there is no reason for me to understand that it will also not be a surprise like telecom. So we can expect a similar kind of monetisation on the retail side also. There is a potential plus there.
There has always been this disbelief that because the stock has been moving very sharply and at every level, probably most of the investors felt why it should go to such levels and in what way shall we give a valuation to this stock? That is perhaps the reason why it has been growing further. It has moved very sharply in the last three months. Probably it is time to cool off a bit and that will be good for a bigger run in the future. If it cools off, then probably that is the right opportunity to buy this stock. One should definitely look at it then.
Other than Reliance, there is resilience in IT stocks once again. We continue to see momentum building up there not just in the heavyweights but also in the midcap names. What is your view on IT and is there anything specific that you are looking at?
We are looking at both midcap as well as the large caps. In fact, this is the sector which has probably surprised most with the earnings because many people were thinking what will happen to them if the Covid problem continues and with the kind of problem we are seeing in the US, I guess, these are the companies which have shown the best adaptability to the environment.
They have adapted well to work from home and many of them are now talking of working permanently from offsite and that is a very good thing for their margins and for their continuity of business. There is a good potential there. Many of the stocks have already performed well. We hold a few names there in the midcaps, mainly the ones which belong to the largest infrastructure company and there are product companies.
One of our companies has already sold its business at three times valuation which is again a very positive thing and that gives the confidence that there is a value in these stocks and one needs to stick to them for a long time and choosing the right stock is equally important. IT will still give good returns from here.
What are you pencilling in for ICICI Bank?
I cannot talk specifically about the numbers that we are pencilling in, but the important thing to note is about the numbers will be again the commentary about the moratorium part. And precisely for that reason, we have not added any banking stock in our portfolio in the last four months although many of them have shown big resilience. We missed that opportunity mainly because we are still not confident that all these are out of the woods.
We will actually see the pain only when this moratorium thing goes away. Now there is a lot of confusion with the numbers being told as what the management wants to tell, we do not know what is the truth, how much is actually going to be the impact. I do not think anybody can calculate the actual impact of those moratorium numbers right now. So it is better to wait for some more time. The value will continue probably depending upon what was the expectation and where it is 1-2% up and down. We will wait for September numbers to come wherein this position about moratorium is clear then only we will take a call on the banks.