BHEL, NTPC look value buys, but significant upsides unlikely: Hemang Jani

In a chat with ET Now, Hemang Jani, Senior VP, Sharekhan, shares his views on stocks that are hogging limelight these days.

ET Now: IDBI Bank was among top gainers on Monday. It was up may be because of the FM comments. Two select power names have also started moving up after the FM said a lot of work is being done in the discom space. He added that things will start getting better soon. He said this with in an interview with ET Now from Hong Kong as well. How do you look at these changes that have happened as a result of a comment that is coming from the government?

Hemang Jani: As far as IDBI is concerned, it is holding a lot of promise because of the kind of investments that it has, but the fact of the matter is that it has been a huge underperformer.

The asset quality continues to remain weak for the NBFC. I am not somebody who really likes to get into a company because there is a great value in it. If there is no performance, it is not going to give any appreciation at the end of the day. So, IDBI is something that we are not excited about.
As far as power sector per se is concerned, we think that a large part of the pain is in the prices.

If you look at the performance of BHEL and few other power manufacturers, the coal part has been resolved to an extent. That said, unless we see some steps being taken to improve the financial health of the state electricity boards (SEBs) and some concrete steps being taken with the tariff part, the revival will not happen. For that, you need a revival capex; the investment cycle has to come back. So we are a little away from that phase.

In terms of value, BHEL looks attractive or may be some of the other companies like NTPC, Power Grid are looking attractive. I do not see a case for a significant appreciation in these stocks at this point of time.