Piramal Pharma may double in a year; 4 metal stocks can give 20% return in 3 months : Sanjiv Bhasin

“Piramal Pharma is my dark horse play for 2023. Their CRAMS, their API and their CGS businesses are starting to show a lot of expansion. Yes, there was this overhang of debt which has risen. Plus, they have had a higher taxation but the Piramals have issued warrants at Rs 126. So at Rs 70, 72, Piramal Pharma is a steal. This stock can double in the next one year. Divi’s is going to be an outperformer but Piramal Pharma is my dark house for doubling in the next one year, ” says Sanjiv Bhasin, Director, IIFL Securities.

I want to focus on the railways theme. Titagarh Wagons came out with their numbers and it is a blowout set. The loss that they actually posted has turned into a profit this quarter of about Rs 48 crore. They have expanded more than 100 bps on a year-on-year basis on their margins. It has been a bit of a mixed bag. But the market is now very divided on how to approach railway stocks and whether they were a fancied frenzy with the best behind us?
I have been in the markets for fairly long and railway stocks were always few weeks before the rail budgets and then they tended to die down. But look at the performance of RVNL or an IRCON or a Titagarh Wagon. It is telling us that the capex and the intensity with which the government is focusing on rail and in-road transport is humongous. That is why these companies' margins are maybe the best ever in history.

They have run up a lot and they have doubled, tripled in the last two years. There can be caution because they are over owned but as a theme, that is what we are trying to tell you, that the economy is going all guns blazing. When did you see Siemens, Thermax, L&T hit all-time highs? So I am very, very positive on the overall market.

Now, obviously, Titagarh and RVNL have been huge doublers from recent times. And there will be profit booking and questions on the numbers. Generally, the adage is sell on good news and buy on bad news, which is why we are turning contrarian and buying some of the metal stocks, which we think in the next three months will be outperformers.

Could you name any of the metal names that you are bullish on and recommend a buy?
Simply put, we think copper may have come too close to bottoming out. We think next week, the dumbass deal on the debt ceiling, which has happened 68 times out of 80 years, is going to get through and that is always going to be a cause of concern. Why not have a budget and clear the balances? But you will live with the US and how their whims and fancies go. Once that is done, the dollar is headed lower.

Jindal Steel becomes an extremely attractive buy at this price, along with Tata Steel. Other than steel, Hindalco and Hindustan Copper. If you have a three-month period, these stocks can give a 20% return as both ferrous and non-ferrous have come back on the table with China spending and the underperformance coming to an end.

Where does your preference lie when it comes to the auto space?
Firstly, you are all welcome when you come to Delhi along with the restaurant. We will also take you to Taj Vivanta, which is a stone's throw from my house. And it belongs to my cousin, run by the Taj franchise. They are seeing the best EBITDA break-even in the last 10 years. I am just giving you a fact. It is not something as a disclosure. But you will be amazed at the turn in room rates and how Taj has become the most wanted brands and Mr. Chatwal stated that if I wish I had two, three more branches in Delhi and Bombay because business is roaring. That is to tell you the outperformance.

The stock has almost doubled or tripled in the last three years. On auto, I am very, very bullish on Maruti and I am extremely positive on some of the OEMs like Bosch, which has been a big outperformer. Hero Moto is my dark horse. Tata Motors has done in the last six months. This year will belong to Hero Moto given that rural income and two-wheelers are seeing a lot of traction. Out of every four motorcycles charged on EVs, three are Hero Moto and it is not a very well-known fact. They are gaining market share in EV, which is a small segment in the two-wheeler. But this stock can be a dark horse along with Maruti.

Finally Divi’s has managed to fix all the challenges that they have had because in 2020 and 2021, this was the real darling stock. Nobody wanted to sell Divi’s, everybody wanted to buy. Post two quarters of bad performance, Divi’s is now at the receiving end. Do you think the stock has finally bottomed out post numbers?
I think a lot of the pessimism and over-ownership was done with. I think numbers are very fine and you do not have to keep weighing all these stocks just because of the Covid wave and so on. In contract pharma, they are doing extremely well and I would like to suggest one more name, with your permission.

Divi’s is well-owned. Piramal Pharma is my dark horse play for 2023. Their CRAMS, their API and their CGS businesses are starting to show a lot of expansion. Yes, there was this overhang of debt which has risen. Plus, they have had a higher taxation but the Piramals have issued warrants at Rs 126. So at Rs 70, 72, Piramal Pharma is a steal. This stock can double in the next one year, notwithstanding that the original business of the Piramals was pharma before they sold a blockbuster to Abbott and then they diversified. If you ask me, Divi’s is going to be an outperformer but Piramal Pharma is my dark house for doubling in the next one year.