IIFL’s Sanjiv Bhasin is bullish on these 4 NBFCs, here’s why

Sanjiv Bhasin, Executive VP-Markets & Corporate Affairs, IIFL Securities, talks to ET Now on relevance of IT and 65974480 65966619 65964784 pharma stocks as rupee hedge, where to pick winners among NBFCs and whether to buy Yes Bank stocks.Edited excerpts: IT versus PharmaIn last two weeks we have used all rallies in IT to reduce positions. We are underweight IT and overweight pharma. That is the way we want to play the weakness in the rupee. Pharma will be a standout sector in 2019, earnings will justify multiples.For IT, the best may be priced in already. The valuations are getting extremely stretched and it is a myth that a weak rupee is a very good proxy for rising margins. I have not seen that in many years. It is just a routine as they are cash rich. But we remain overweight pharma and on any decline, pharma should be your top overweight for playing the rupee hedge.How to approach DHFL & other NBFCsFear is the best time to buy but I do not think there is any smoke without fire. The company has tried to regain confidence but I would give it a pass. Rather, I man putting my money at Rs 220 on Bajaj Finance. I am looking to buy Mahindra & Mahindra Finance and using the decline to buy L&T Finance. The fourth dark horse would be Equitas. These four NBFCs would be very stable and we would definitely look for an extra alpha in L&T Finance and Equitas. This is the time to get in Bajaj Finance. The stock has corrected superbly and that would be our top spearhead going forward. For DHFL, it is a case of glass half full, half empty. If you are a trader, it is oversold and most of the unknowns are behind us. So you could get a 20-30% upside.Should one go contra and buy Yes Bank? Every mutual fund and every FII and every insurance company owned Yes Bank like there was no tomorrow. One man cannot be the key to the health of a bank. This is an unfounded type of weakness that we have seen through. There can be imponderables like asset quality diversions but at a Rs 50,000-crore market cap, Yes Bank has priced in the worst. Yes Bank is a perfect stock at Rs 220. I would be looking at targets of Rs 325 in next one year.

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