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May 29, 2012 04:38 PM IST | Source: CNBC-TV18

Don't expect much from ONGC results: SP Tulsian

Oil and Natural Gas Corporation (ONGC) will declare its fourth quarter results today. In an interview to CNBC-TV18, SP Tulsian of says, he doesn‘t expect much from the results of this quarter.

Oil and Natural Gas Corporation (ONGC) will declare its fourth quarter results today. In an interview to CNBC-TV18, SP Tulsian of says, he doesn’t expect much from the results of this quarter.

Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video.

Q: ONGC will declare its results today. What are you hoping to see, anything spectacular or just a lackluster performance this time?

A: I think it will be lackluster performance. We have already seen the results of Oil India; one needs to just enhance it by nine times. Ultimately, it is the subsidy sharing which spoils the party for ONGC and Oil India results. So, I do not expect much from the results of this quarter.

Q: What about SAIL? What did you make of those numbers?

A: I think the results are looking quite good. If you see the results of JSW Steel, they can very well get compared with those results. It looks like the company has given a positive surprise on the results.

Q: Any thoughts on the infrastructure names, Lanco and GMR? Would you touch anything here?

A: Lanco is looking interesting because I am expecting that results will not disappoint the market. Any positive bottom-line should cheer the market. If you see the news flows, the promoters are looking to exit from the road portfolio, they are looking to monetise some of the power projects, which are either under erection or which are operational, of more than 4,000 megawatt each. So, Lanco looks good. But I am not too hopeful for GMR Infra.

Coming on the other stocks, GVK, the news flow of the environment clearance having received for their Alpha Coal Block Projects in Australia also doesn’t look to be too exciting for the stock.


Q: The market liked the realistions that Coal India saw this time around. Some analysts on the street believe that the downside for the stock is limited from here. Post the earnings, how would you map the trajectory of Coal India?

A: I have positive view. The company has moved from useful hit value to gross calorific value based pricing from January 1, 2012. At that time, there was no clarity that what will really be the impact, but that has seen getting reflected into the Q4 numbers. I am positive.

Except for the employees cost, I don’t think there is anything disappointing. The fall has partly got offsetted by the slight increase in the other income. But overall I think the change in the pricing system to gross calorific value has paid off. That will have the positive reflection on the working ahead.

Q: What is bothering Kingfisher? Is the market getting despondent that a deal might not happen to bail it out?

A: I think there are more concrete moves having initiated by that. I do not think that deal can happen because the management. Vijay Mallya has to take care of the debt portion. Unless and until something is reached to lender through the company for the debt of about Rs 6,000-7,000 crore, one cannot initiate the talk of inducting a strategic investor. Since there has been no positive development, nothing has been heard on account of debt restructuring or debt repayment debt by the company or by the promoters, probably that is causing nervousness to the market.

Q: DLF and HDIL will report their numbers tomorrow. What are you expecting to see this time around?

A: One can take a call on HDIL, but I don’t think that DLF will really be a wise idea. I have not seen any positive development happening in case of DLF, non-monetisation of the assets, debt reduction. That is what they have been talking of these two properties. One is Mumbai and second is Aman resort.

HDIL seems to have sold good quantity of TDR held with them, they have infact sold some of the FSI also. So, probably that will get reflected into the Q4 results. The kind of beating the stock has seen, technical factors qualify it as a buy for the short-term.

Q: Have you looked at this Hotel Leela?

A: Horrible number. I don’t understand.You get excited to see a PAT of Rs 210 crore and when you knock off the exceptional of Rs 400 crore, you straightaway land up with a loss of about Rs 200 crore. They have been struggling with the debt burden. They have been talking of the strategic investor. They have once or twice mentioned the name of Reliance Industries also. So, we know all these kind of problems happening. Overall, the hotel industry has not been doing so well. The EIH and Indian Hotels have posted their results. We have seen the dullness in the results of the two leaders. So, nothing can really be expected from the Hotel Leela as well.


Q: You track Bajaj Electricals as well. What did you make of those numbers? Would you buy it on a dip or would you be cautious?

A: I will buy it on dips. If you analyse the whole results, if you knock off the engineering and projects division, which contributes about one-third to the top-line, which largely caters to the transmission line towers or telecom towers or maybe the rural electrification projects, we have seen the EBIT margin falling from 11% to 5.5%. That has been the case for Q4 as well as for whole of FY12. If you take their call on the lighting division performance, they have improved slightly on lighting division.

On Consumer durables, the performance has been static. So, I think the performance can get improved for engineering and project division in FY13. The stock may correct and settle at around Rs 180 there I think it qualifies a good buy.

If you recall the second company which is controlled by Shekhar Bajaj, that’s Hercules Hoists. Even that company has been lying low for quite sometime. We see sporadic or maybe the renewed buying interest coming in at the lower level which take the prices swiftly move up by about 25-30%, maybe in very short duration. So, maybe even this could fall in the same category at Rs 180. Bajaj Electrical can be given a look.

Q: Do you think it’s just profit taking after that big jump post numbers or anything more substantial than that?

A: I am quite positive on the stock from a fundamental point of view. Rs 110 looks on a technical view. Yesterday, we saw the stock breaching Rs 107. It did not touch Rs 110. But on a fundamental basis, with a one month view, I am still expecting a price of Rs 120.

The technical adjustment is taking place. In the last couple of days, we have seen the short covering. Once the position becomes normal, the short covering gets covered or maybe the longs, which have been initiated at lower levels, get liquidated. If the stock corrects to maybe about Rs 98-100, I don’t think that it can really fall below Rs 98. So, there as an investor with a view of one month, I will initiate a buy with a target of Rs 120.

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