Poor performance of public sector banks in the second quarter may lead market sentiment towards cement, says SP Tulsian of sptulsian.com. In an interview to CNBC-TV, Tulsian also said United Spirits can go up to Rs 2000 per share if held for 8-12 months.
Traders in the coming week can look at cement stocks as an alternative sector to bet on. Poor performance of public sector banks in the second quarter may lead market sentiment towards cement, says SP Tulsian of sptulsian.com. In an interview to CNBC-TV, Tulsian also said United Spirits can go up to Rs 2000 per share if held for 8-12 months.
Below is an edited transcript of Tulsian's interview on CNBC-TV18:
Q: What would your top three-four picks be to bet on either with a trading perspective or with an investment view as we head into next week?
A: I am keeping my stance more from trading angle because next week is a truncated week. The quarterly results of State Bank of India (SBI) will probably lead to pessimism in the form of profit booking in all PSU banking stocks. Therefore, I am keeping my short stance on SBI, Punjab National Bank (PNB) and Canara Bank. But conversely, I have a positive view on cement sector as it may feature in sector rotations among people who are looking for some positive ideas. So in the cement space, I am not going for the smaller one because my trading is for the whole week. So the three stocks to go long are in the cement sectors — ACC, Ambuja Cement and UltraTech.
Q: The biggest mover last week was United Spirits with a 15 percent gain; and that stock has been subject to so much scrutiny ahead of the Diageo deal. The deal finally came through on Friday. From here where do you see the stock move?
A: You need to break them in two parts. In the short-term, I think the domestic investors will not be too gung-ho as the open offer of Rs 1,440 seems bit lower than the expectation of RS 1,500 apeice or maybe as high as Rs 1,550 per share. But the FIIs, which are holding about 48 percent stake in the company, will be positive. So those who can take a long-term call will find it positive after six months, which Diageo will need to have a majority stake in the company if the open offer goes through. FY14 could see an EPS of more than 50 and even if you apply a PE multiple of 40, which is very conservative for the largest spirit maker in the world (maybe parallel to the Diageo) with 120 million cases, the share can move up to Rs 2,000. But for that you need to have a time horizon of at least 8-12 months. So you need to break them in two parts, one for short-term investor and another for long-term investor. But eventually the stock will go into the high-end of the FMCG kind of stocks, which we see in case of Hindustan Unilever (HUL) or ITC kind of space.