In an interview to CNBC-TV18, SP Tulsian says he has a negative view on rice stocks even though China allowed import of basmati rice. Except AP Paper, he maintains a negative view on paper stocks. Tulsian however sees a limited downside in United Spirits and he expects good Q4 results for Petronet LNG.
Below is the edited transcript of the interview. Also watch the accompanying videos.
Q: Rice stocks are up by 6% today after China decided to allow import of basmati rice from India. What is your take on stock related to rice business?
A: Yes, the stocks are up on China’s nod to import basmati rice. But, I think there is no dept in the Chinese market. Very few companies will go in Chinese market by sidelining the Middle East, the US and Europe markets which are more lucrative.
Wherever the government allows the export of rice we see a run up in these stocks, which get fizzled out quickly. So, at higher levels, short-term investors will get trapped. I won’t be taking a positive call or making fresh entry in any of these stocks at the current level.
A: The order is seen as quite negative because of the downward revision on the estimates of profits of the company which is making the stock fall to these levels. We may see renewed buying interest coming back in United Phosphorous at Rs 115-116. Currently, I don’t have a positive call on Excel Crop Care.
Q: What is your recommendation on paper stocks?
A: I have been maintaining my negative view on paper stocks but AP Paper is an exception. I won’t be able to vouch for the expected rumor that delisting move is likely to get initiated by International Paper. International Paper has acquired stakes in Bangur’s at Rs 542 per share, the delisting will happen at a very high price.
Whenever the paper prices stocks have gone up for any reason but they have never seen any kind of improvement in their financial performance and they have never made money in last one decade for the investors. Hence, I will keep myself away from the paper stocks. For AP Paper, I have conviction and play on the themes with a time horizon of couple of months.
Q: Will Petronet LNG repeat the performance that it threw up the last time?
A: I am positive on the results of the company. Q1 and Q2 performance have exceeded expectations and looks quiet good. The company has a strong presence in both LNG market and spot prices. Q4 results looks very much on track. All three quarter results have been quite good. I am holding a positive view on this stock. The reason the stock is correcting because it must be keeping a cautious view ahead of the results on the share.
A: Mangalore Chemical has been put on the block by the promoters as it is not fitting into their strategic business, fertilizer business. The company is holding prime asset in the form of surplus land and profit-making fertilizer company. The company is into urea making as well. This can fetch very good valuations whenever the promoters will exit. It is certain that in next two to three months a stake sale is likely to happen in Mangalore Chemical.
Currently, we are seeing profit booking in United Spirits. It has moved to as high as Rs 770-775. Since then, it has corrected by Rs 100. The downside from hereon is very limited. Renewed buying interest will come in at Rs 650.
For Kingfisher, there has been no news for last three-four days except some negative news of support staff going on strike or the notices issued by the I-Tax Department to the director that was keeping the share subdued, but not much of a downside is seen in this stock. If somebody wants to play on the UB Group stocks then these are the level where longs can be created, but not from a trading point of view, more as a positional trade or as a short-term investor with a horizon of about a month.