In an interview to CNBC-TV18, SP Tulsian of Sptulsian.com informed that they have scheduled this all party meet on Monday to discuss on FDI. He feels that this is seen more as a political agenda and nobody is interested in having a healthy discussion.
With regards to Hindustan Copper’s bid he is very satisfied and says that this will attract the investors.
Below is the edited transcript of his interview with CNBC-TV18
Q: What have you made of the latest from Hindustan Copper and the kind of bids that it has got? Do you see the demand going through at the indicative price of about Rs 158?
A: I am satisfied with the demand or with the response. I think we have received 1 crore 15 lakhs which constitutes 30 percent of the bids of the size. If you really see 155, that sets a very fair value. That will really attract the actual investors and non LIC. We have always feared in respect to the PSU divestment that LIC will come to the rescue at the last moment. However, this time I am expecting that this is not likely to happen. Even if we have any kind of tepid response, it will be at least close to 2.5 crore shares. I am keeping my finger crossed that I will see the response getting fully met by the non LIC investors of about 3.7 crore shares. So, I am keeping my positive hopes on the Hindustan Copper response.
Q: How worried are you with regards to today’s adjournment and the all party meet on Monday as well?
A: We have scheduled this all party meet on Monday to discuss on FDI. So, definitely the things are going to remain murkier for the parliament to run. I won’t be surprised to see both the houses getting adjourned in the first half or may in the next couple of hours or so.
Coming on the all party meeting, I am not very hopeful. Due to the kind of stance adopted by the BJP that unless and until we have the voting on FDI they will not allow the house to function. So, I don’t think that merely calling an all party meeting can really resolve the dispute or the logjam which has been prevailing. This FDI is not an issue to be discussed by these parliamentarians, in fact this is more an agenda for all the political parties. Ultimately BJP will be using this FDI as a political agenda in the elections of 2014, in the middle class or merchant community which it belongs to.
Similar will be the case by the Congress also that, this has been very fruitful for the agriculturists, farmers and even for rate control and all sorts of things. So, this is seen more as a political agenda. I don’t think that anybody is interested in having a healthy discussion on this. So, BJP will not allow the house to function and Congress will not budge to agree for voting. Even if it does, it is not going to happen for the first two weeks, out of this four week schedule of the parliament. Let’s expect that for the first couple of weeks, we have only seen two days. Yesterday it has started, so may be for next remaining 8-10 days we are going to see the same drama of houses getting adjourned with nothing getting transacted.
Q: What is your view with regards to Asian Paints, which is the top gainer of the Nifty or in general accumulation of more defensives at current levels, would that be a prudent strategy?
A: Asian Paints is an excellent stock. I sometimes rate this stock better than or secure than HUL, ITC or maybe for any other IT stocks. If you see the consistent performance of the industry, I think paint industry is the only one, which has given a top-line growth in double digit for the last two decades. Obviously Asian Paints being the leader in that space because there are very few players available.
There are only five companies in the paint space, which are into the listed sphere. So, obviously the share remains defensive or the most precious investments by any investor. Anyone can use the dip to buy the stock. I don’t think that when the stock moved by Rs 50-70 that’s a right day. One can wait for the stock to correct and can just buy the stock even for a view of three to six months or years.
Q: What is your view on Ranbaxy and the news that we have seen today with regards to a possible recall of Lipitor generic in the US market?
A: It is a disturbing news. We have seen that they have called the Atorvastatin and the Lipitor generic. May be the inquiry will take about couple of weeks. That will keep the negative perception continuing on the stock. The stock can correct to Rs 460. We have been in fact seeing the positive bias on all the pharma stocks. Some of them were Cipla, Biocon and Ranbaxy and fourth is Aurobindo Pharma. A lot of trading positions is seen getting built-up in these stocks. So, may be this recall of Atorvastatin is seen quite negative for the company which is not going to get erased in the near term. A level of Rs 460 can be looked again by the traders as well as investors.
Q: Siemens has net sales at Rs 3,269 crore vs Rs 3,472 crore and a net loss at Rs 55.8 crore vs Rs 178 crore profit (YoY). Were you expecting these numbers as a loss for Siemens?
A: Not at all. If you really see the other cap-goods company, more specially in ABB we have been expecting the flat numbers. Such losses were never expected from the company.
Q: How significant is this mandatory 5 percent ethanol blending for Praj Industries? Do you think there is more upside for Praj Industries on the back of this news?
A: No, In fact I see this as exuberance. In fact if you see the present scenario the open market price of ethanol is ruling way above the contracted price with the oil marketing companies. It is at Rs 27 while in the free market ruling it is at Rs 31-Rs 32 per litre. I don’t think except for sugar mills anyone will be keen to set up the distillery. Praj is mainly the capital equipment supplier for distillery. So there is a general feeling that everyone will rush to set up the distillery in the coming time. However, this is not the case because from where you will get the molasses to process and make it into ethanol, as you don’t have any other route. You can’t really fall back on the food grains to make ethanol which is very expensive. Also it is used only for the portable purposes not for industrial use. I think this has an over exuberance for the company. Definitely the beneficiary will be more seen for the integrated sugar mills. I will be taking the optimistic view on stocks like Balrampur Chini, Bajaj Hindusthan, Shree Renuka Sugar. Profit booking will be advised in case of Praj Industries.
Q: What is your opinion on Jet Airways in terms of a fundamental view for this stock and for the aviation space in general?
A: I am keeping my positive stance on the aviation sector. Considering there are only two players available – one is SpiceJet and the other one is Jet, as IndiGo is unlisted company, the kind of market share enjoyed by them will definitely be reflected in the better working by both the companies in their Q3 numbers. However, I think the kind of run up, which we have seen for Jet Airways maybe share having crossed Rs 500, I won’t be advising a fresh entry being taken in the stock.
I am keeping a positive stance on SpiceJet because the company is flooded with the news and is expecting better numbers of Q3. Apart from that we are expecting the stake sales to happen in the company. There has been some positive development in respect to Kal Airways. The Maran family’s resignation from the company indicates that probably the 32 percent stake held by Kal Airways will be up for sale.
Taking all this into account, I think SpiceJet can move to the Rs 45-46 level in the next one month. Developments happening by the UB Group for giving debt reduction plan to the banks for Kingfisher can also infuse some positive sentiments.
Q: If retail investors are looking to subscribe to Tara Jewels, what would the recommendation be?
A: I have been keeping my positive stance. In their FY12 financials; top-line was Rs 1400 crore, bottom-line was Rs 5500 crore which resulted into an EPS of Rs 30. Also they are expanding their 30 retail outlets to 50 by March 2013.
So, FY14 can definitely be expected with an EPS of close to Rs 35-36. The IPO partly constitutes of the offer for sale and partly of the fresh issue. So, taking this overall call share is issued at a PE multiple of close to 6. Making the comparison with Gitanjali Gems and other comparable peers, I found the issue to be quite attractive even at Rs 230.
Q: Any view with regards to any particular stock or any particular paper that you would be most bullish on? Do you think there is enough appetite to absorb so much paper in the market?
A: I don’t think there is any kind of liquidity dearth in the market. There is lot of appetite. We are not going by Blue Dart or other offer for sale where the promoter stake is getting reduced but if you really go by Hindustan Copper and Tara Jewells, I have found valuations of both to be quite attractive. It will be interesting to see.
Similarly for Bharti Infratel also which will be an interesting play. Important point is can they really catch before 15th or 20th December. After 20th December we generally see the lull for the primary market. The market revises only in the first week of January, after 5th January. So, I have my doubts whether they will be able to catch by 15-16-17th December. Otherwise, January onwards things will really be very hectic and eventful. Even from the government point of view I am quite hopeful. NMDC andNTPC both will be of real interesting play where the government can look to mobilize about Rs 18,000 to Rs 20,000 crore.