sanjiv bhasin stocks: FMCG to outperform in near term; bet on Bata, Marico and Nestle: Sanjiv Bhasin

“You have got a good rainfall, inflation is under control and I think the choice and aspiration of growing to bigger banks is growing. I continue to think Hindustan Lever on any correction, so as Marico and Nestle, but our two outperformers there are going to be Bata and Patanjali,” says Sanjiv Bhasin, Director, IIFL Securities. Are you smiling all the way saying, I told you so, ABFRL, Idea, those are some of the stocks that you just recommended.I told you, bring me when you are up 700 points, not 150 points, and that is what we did by the end of the day, so kudos. And ABFRL was rocking along with Idea. So, who says you cannot make money? All you have to do is watch ET Now. Yes, I think we have made that sharp recovery. Maybe we plateau here for a few days. You need digestion. FIIs outlook will keep rotating on sectors. But sectoral outperformance is there. You are getting a trading opportunity in some of the PSUs and we continue to think AB Birla Group is being re-rated and that is going to be a star performer this year.

One cannot ignore the move that we are seeing within the entire FMCG, liquor basket as a whole. Do you believe that this is sort of just a flash in the pan move or there is something real here? Well, both sides. I mean, I have been advocating lever at 2200 when nobody was asking and I gave you the premise that rural incomes are the biggest beneficiaries, whoever comes to power.

You have got a good rainfall, inflation is under control and I think the choice and aspiration of growing to bigger banks is growing. I continue to think Hindustan Lever on any correction, so as Marico and Nestle, but our two outperformers there are going to be Bata and Patanjali.

Patanjali purely because of the reach of the rurals and Bata because of the aspiration to grow to a brand like Bata. However, there will be this sectoral churn, that is why the index has found very-very strong footing. So, there had been a lot of bloodletting in the PSUs, in the railway and defence stocks, that is where you should be a little cautious. But I would be even more bullish now on power. Just look at the numbers from IEX, what is the record turnover. Look at some of the largecap insurance plays. HDFC has just crossed 3 lakh crore of AUM and these are achievements which are taking place where the stocks have done not much. So, FMCG continues to be a basket which in the near term will outperform and you will have sectoral churn in the rest of the areas. Defence and railways is something you should be a little wary of.

Do you have any of these city gas stocks? At one time you were tracking IGL closely if I remember correct. Do you have it on your radar now? Any thoughts there? Correct. We had all three and MGL and Gujarat Gas gave almost 40% returns in the very short term. IGL was languished, but from that 410, 415, it came to 450. We still think this is a very good play. Given that city gas distribution is only increasing, their volumes and margins are a question of the market dynamics or little cyclicality.

But I think they are a must-have in your portfolio. However, our darling over there has been GAIL. From 110, 120, that hit 220, and it has been a 60% gainer.

We still think on any decline, GAIL should be added in your portfolio. But city gas distribution, particularly MGL and Gujarat Gas can be outperformers.

Also, I would like to say that our outperformance in FMCG is more on Bata. So, I erroneously said Patanjali but you can avoid that. I would be more bullish on Bata and Marico and Nestle. Lever, of course, at 2200. But two other plays which I would suggest is HDFC Life.

It has today crossed three lakh crore of AUM under management and these are now doing quasi-mutual fund businesses along with insurance. You cannot but make money in insurance. This is a theme for the next 20 years. I think valuations have corrected enough. This is going to be a very-very strong outperformer in the time to come. Along with that, please watch out for SAIL. As dollar and yields weaken, SAIL numbers will be far ahead of the market and steel prices are headed up. SAIL can be an outperformer. And lastly, Coal India, 30% merchant prices have gone up and they are going to be laughing their way. In fact, this quarter for Coal India may be the best in the history of the company.

Given the run-up we have already seen in both Bharti as well as Vodafone Idea. Would you recommend buying these, even at the current levels? Where has Vodafone moved? It will move only after 22, 18 rupees. When it crosses 18, then you call me. Like yesterday, I told you when we cross 700, then call me. So, when it crosses 18, then we will take it again. But 22 to 25 is coming in Vodafone, do not be surprised.