Why Choksey wants to stay invested in RIL

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.

from Economic Times https://ift.tt/3g6oVOj