Staying invested in RIL is my mantra: Deven Choksey

This financial year, in every quarter, there has been some event lined up as far as respective companies are concerned from the monetisation point of view, says the MD, KR Choksey Investment Managers

The big conversation is about RIL. We have got two downgrades coming in from Edelweiss and CLSA. CLSA is now setting the target from a buy to an outperform at Rs 2,250 from Rs 1,753 a share. Edelweiss is downgrading to a hold from a buy saying it has already given a 4 times rally. Both are saying we have seen the stock multiply several times and it is time for it to cool off. The large valuation surprise may be difficult in the near term, says CLSA. Is the stock priced accurately at current levels or do you feel the rally petering out?
One could possibly argue that the momentum could get over for the time being because most of the events are already priced in. If one wants to buy the argument that the new investors would be coming in somewhere in the September to December period, then in such a situation, for these two months the stock may have already run up. That could be the argument on which the ratings could probably change.

From the long term perspective, there are three important aspects to Reliance. One, the Jio platform is already factored in and because of that, a price rise has already happened. In retail, an outline model has been converted into an online model and this is where the major amount of excitement and prospects are going to be for prospective investors and even strategic investors.

Some of the large strategic investors may probably find this a ready platform to come in. So, retail as a story could unfold. That is one aspect of it and on top of it, the O2C business (order to cash) is already progressing little bit slower as explained in the AGM. In my view, somewhere in the January to March quarter, even that business is expected to find the investor they have been talking about. This financial year, in every quarter, there has been some event lined up as far as respective companies are concerned from the monetisation point of view.

I would not be buying something which is one or two-month kind of vision. I would rather stay with an investment which is likely to give a better investment reward over a period of time. So, staying invested would be my mantra as far as Reliance is concerned.

What caused the panic in banks yesterday? Was it RBI, was it ICICI Bank numbers or pure play within a profit booking because frankly I did not find any fault lines with ICICI Bank numbers and markets yesterday really made a mole out of a mountain when Aditya Puri stake sale news came out?
After the event is over, probably a sell takes place and I think that is what has happened as far as ICICI Bank is concerned. Since the MD has sold these HDFC Bank shares, there is the concern on that aspect in the market, In my view, nothing has changed fundamentally.

One particular event which is happening on Thursday is the expiry day. Before the expiry on Monday-Tuesday, you have the market going down and particularly Bank Nifty has a tendency to bring the market down and thereafter on Wednesday and Thursday again, the recovery starts taking place. Even this time you might see it today. Probably by Wednesday-Thursday, the bank stocks would come back to the normal levels.

This volatility is largely caused by the options market and that is where the expiry days are required to be looked at very carefully. But fundamentally, things have not changed. On the contrary, I remain distinctly positive after hearing the commentaries of respective management. At the same time, given their confidence going forward about the business including even ICICI Bank. Despite making provisions for NPAs, the bank remains distinctly strong as far as the prospects are concerned. Going forward, we would remain a watchful buyer of the stock on every dips.

One stock that I want to bring up is ICICI Bank. What according to you disappointed the Street so much? The Q1 numbers sort of tick all the boxes, strong liability growth, build up in provision buffers. There is an upgrade to buy for most brokerages. They have revised their price target from Rs 380 to about Rs 400. Yet the stocks fell 6%.
My reading says that it is basically more of a selling which came in after the result announcement. One of the factors which came into notice was the provisioning that they did and there is little amount of concern that this provision might continue even in this quarter. That could be one of the reasons.

A larger part of the reasoning is the expiry of the month-end contract which is happening on the first day. Generally, during the last four days of the expiry of contract, you tend to see the banking stocks inching lower and that is what is happening. The leaders like ICICI going down is no surprise. Maybe we will have to wait and see how exactly today’s day open up and maybe during the course of the day how they recover. My strong take would be that many of the banking stocks could be recovering in the next one or two days from here on because technically they have corrected as the event is over. Maybe the buying will emerge but then it is a small correction. I would be a buyer in the dips in banking stocks, particularly like ICICI and SBI per se.