Elixir’s Dipan Mehta: Positive on RIL; prefer PI Industries over UPL

Dipan Mehta, Director at Elixir Equities is positive on Reliance Industries Ltd (RIL) and said that the oil-to-telecom-to-retail conglomerate will start outperforming the markets.

“This stock will start to outperform the markets. Underlying fundamentals are improving, it benefits from rising crude oil prices and commodity price increases are going to benefit the oil-to-chemical (O2C) business. Positive on RIL and such corrections are good opportunities for investors who are underweight in RIL to get equal weight considering its massive weightage in the Sensex and Nifty.”

Within the agrochemical space, Mehta prefers PI Industries, a more focused business model that benefits from many cycles that are underway, over United Phosphorous Ltd (UPL).

“I would give UPL a pass. Within the agrochemical space, the best pick remains PI Industries. I would go with PI Industries rather than UPL.”

In terms of metal stocks, he said, “I would like to be a bit cautious as far as metals are concerned. You need to buy them when there is distress in the sector not when the sector is booming the way it is.”

The oil marketing companies (OMCs) like Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL) and Indian Oil Corporation (IOC) are due for a trading rally.

“Any positive news flow on BPCL privatisation will have beneficial effects on the P/E multiples of IOC and HPCL. These are highly cyclical businesses and they are becoming more like utilities, the end of the day there is hardly any growth as far as OMCs are concerned because of the kind of growth in end product volume. So you could make a trading bet on it but certainly not great long-term portfolio stocks,” Mehta said.

Within non-banking financial companies (NBFCs), Bajaj Finance is a nice stable stock, he said.

“It is a good time to buy midcap stocks and microfinance companies and gold loan companies could outperform the overall NBFC basket,” Mehta added.

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