2 specialty chemical stocks to go for if you seek 40-50% upside in next one year: Sanjiv Bhasin

Sanjiv Bhasin, Director, IIFL Securities, says “Chemplast Sanmar, belonging to the Sanmar Group, has seen a huge accretion in European orders and the underperformance of many years is coming to an end. Chemplast Sanmar can be a huge outperformer. The other one is Jubilant Ingrevia, the parent company of Bhartias and was known as VAM Organics 40 years back. If one is looking for the next one year and a 40-50% upside, then these two specialty chemical names are where there is a lot of opportunity on the upside.”


What do you make of the recovery in the Adani Group of stocks? GQG has picked up further shares in the last three days of recovery that we have had in the Adani Group shares. LIC has gained more than 50% from lows because of the amount of holding they have in the Adani Group as well. Would you recommend buying into these names?
That is a million dollar question. You had to be brave at a thousand rupees four months back and if you had bought it at two-and-a-half thousand and saw thousand, well, you missed nothing. The person who is jingling with money is Rajiv Jain and kudos to him for buying such a big block when everyone was extremely cautious and bearish. It also allays fears of the soothsayers who had said India's debt and India's banks are under sovereign problem. It is your banks, SVB, First Republic, the 167-year-old Credit Suisse; so forget about the Europeans and the Americans, look at your own businesses.

These are homegrown monopoly businesses which only come with a lot of debt. If you went to Ahmedabad, as I was on Saturday, the airport has transformed into an international airport and kudos to the Adanis. Buying at this rate would be highly speculative, but the long-term story remains extremely robust.

What about Ambuja, ACC? These stocks are nowhere close to the open offer price also. The investment was done at a much higher level. Wouldn't you say that this is more like a safe and a no brainer?
Correct, but that was much better at Rs 320. We were very positive on Adani Ports at Rs 450 and Ambuja at Rs 320 and we did a very strong SIP and conviction buy. Touch wood! That has played out well. We think cement is a no brainer. UltraTech is hitting new highs. The numbers from Ramco are telling us that the south is up and running. We think ACC, Ambuja combined are definitely going to gain market share.

Once we are through with the monsoon, pricing power and volumes both will be there. I have never seen the type of construction activity which I am seeing now and that is evident from the likes of NBCC, DLF, Godrej all hitting 52-week highs.

Everyone has limited capital and when you buy something, you will have to sell something or you will have to invest fresh capital. Looking at how markets have been, I doubt that a lot of investors have actually committed to more capital. So, they are juggling between what they have. Which are the eight-nine stocks which one should buy and sell?
I am not in the selling camp, but I think that maybe some of the select consumer discretionary stocks have run a lot and they could take a pause. Also, there is the anvil of monsoons probability, but those are expensive stocks. There are a lot of midcaps.

The midcap index, by the way, hit new highs yesterday. I am still very bullish on GMR. The airport business is doing extremely well. If you wanted to take a plunge, then at 45, GMR becomes a buy and Lever becomes a sell or book profit in one of those and add on to a couple of midcap names.

LIC has been a rank underperformer. What do you have to say to those retail investors who bought into the IPO or maybe even after and have not made any money since, in fact have lost?
The only word which stays in the market is patience. Be patient with your investment, insurance. The private insurers are doing extremely well. Gross net value additions are adding and the embedded value of LIC is again showing you very strong traction. But since it is a largecap stock, there disclosures will be very sharp and if you have the patience to stay with it, you will definitely make money over a period of time. But like I said, insurance is a very patient game and a disclosure, we have all the three private insurers under our coverage. I will just add two more names.

In specialty chemicals, let me give you two names which we have interacted with and which we think can be outperformers. First is Chemplast Sanmar, belonging to the Sanmar Group in the south. They have seen a huge accretion in European orders and I think the underperformance of many years is coming to an end. Chemplast Sanmar given the pedigree of the management can be a huge outperformer. I think this is a very sweet spot in specialty chemicals and this company is taking it from the front.

The other one is Jubilant Ingrevia, the parent company of Bhartias or erstwhile known as VAM Organics when I started 30 years back or 40 years back and I think VAM Organics spin off, Jubilant Ingrevia, even though there was weakness in agrochemicals, their other verticals are doing extremely well. If you are looking for the next one year and a 40-50% upside, then these two specialty chemical names are very keen where we think that there is a lot of opportunity on the upside.