IIFL's Sanjiv Bhasin picks 2 pharma stocks with up to 25% upside potential

Sanjiv Bhasin, EVP-Markets & Corp Affairs, India Infoline, tells ET Now that while Lupin numbers, especially the India business, was very positive, in case of Sun, the Taro numbers was very pleasing.

Edited excerpts:

Do you think what happened this week was all about crude?

There are several factors. Top three are crude, rupee and bond yields – all are going to be a deterrent for India. Number four is the uncertainty caused by the flip-flop in the Karnataka elections.

Nifty had made a high of 10,900 which was far beyond what most people had thought it could go and that we would see a pull back. So, all the factors put together, saw a little bit of volatility and there was more weakness in the mid-cap space. All that led to a sharp selloff in the last three days.

What do you make of Bajaj Finance numbers? Do you think the stock will continue to go up?

Splendid. I have been tracking the stock for a long time. We had a buy on it on all corrections and last two quarters they were actually very pessimistic on the asset quality but this quarter is a standout and it is telling you that whether yields are going higher or not, juggernauts like Bajaj Finance and some of the others like Cholamandalam, Indiabull, all will stand to gain as they see a huge expansion in commercial credit, This is a very positive factor.

Don’t miss the wood for the trees because the crude and bond yields and rupee may be part of the course of macros, but the earnings are giving stellar numbers from a large part of the market -- whether it is consumption, NBFCs, metals, private banks or most of the other commodities. Use all the declines and be stock-specific. For us, Bajaj Finance has been the cheerleader for this earnings season.

What do you make of Strides’ numbers? The entire pharma sector fell after that. Is this warranted or could it be an overreaction?

Strides has been in the eye of the storm in the last two, three quarters and the numbers have been very volatile. The specific plays on contract farming has been under pressure and I have not seen the full number yet. But the market overdid the reaction on the downside.

There is also talk of opioid doses being under pressure and so on and we have seen the language from Lupin. However, the Lupin numbers, given the India business, was very positive. Sooner rather than later, you should see a lot of resolution on their FDAs. For us, Sun also came out and the number on Taro was very pleasing. Both Sun and Lupin re-warrant a very good look at these prices for a 25% upside by the end of the year.