Sanjiv Bhasin on why a re-rating of India is imminent

| October 01 2019 12 : 15 IST | The Economic Times

India specific assets in mining sector will definitely be lapped up very aggressively.

The intention of the government to create a $5-trillion economy is very much on the cards and for that, they are ready to start this process of strategic disinvestment, says Sanjiv Bhasin, Executive Vice President, IIFL Securities.

A couple of days back we were talking about how the government will not just sell PSUs now, they will also ensure that they get better valuation for them. We have seen how Hindustan Zinc has been a successful divestment in the last several years. If they sell the remaining 30% as well, they can get Rs 25,000-26,000 crore. Do you think this is a good model and should this be replicated in other PSUs as well?
It is a most powerful reform. The government intention is clear now. It wants to sell the jewels in the crown. I was part of a deal in 1999, when at Rs 9 per share, I bought stocks from UTI India Fund -- an overseas fund. Nine lakh shares went to Mr Anil Agarwal as the net seller. I used to trade in Bombay for institutions. That time, the stock after bonus and spilt was up 6.5 thousand times! So you can imagine what price appreciation the government has seen by holding stake so I think it is a win-win situation. The government is definitely going to see premiums on a lot of the holdings which they have and for the parent, for Anil Agarwal, the times are excellent. He is already two-three times bid for the stake and this will help alleviate the fiscal balance and get out of stocks where they have made excellent returns.

For both sides, it is a win-win situation which is again the case in strategic disinvestment in BPCL, selling the SUUTI stake. I was also in the selloff with ITC. That stock is up eight times from the price when it went into SUUTI. So you can imagine what returns these stocks have given in the last 18-20 years.

How are you analysing the metal and mining pack or it is a commodity pack among the PSUs? Mr Modi recently met lot of energy companies in Houston and the buzz is big chunks of Coal India could also be up for grabs. Together with Hindustan Zinc, would there be takers from the strategic global metal and mining space or even the current ones like Vedanta?
Definitely there are enough people who are going to buy that. Let us not look at only one year when auto and infra sectors have underperformed and hence the metal and mining space globally has been weak.

We are talking of trade resolutions between China and US happening next week or beyond and that will set the cat amongst the pigeons. This is the best time to invest in commodities and globally there is a lot of money on the sideline which can be used to buy assets.

Now India specific assets will definitely be lapped up very aggressively. A disclosure, I also own Hindustan CopperNSE -1.87 % which is a small company that has not done much but it has the third largest copper mine. Copper if you know there is a treatment and refining charge which is there by Hindalco and the likes but the real copper is in Hindustan Copper and I think the government is also in the process of selling it lock, stock and barrel. So a lot of unlocking can take place in the next three to six months.

The intention of the government to create a $5-trillion economy is very much on the cards and for that, they are ready to start this process of strategic disinvestment. That will be cheered globally and I feel a re-rating of India is imminent.

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