SP Tulsian of sptulsian.com in an interview to CNBC-TV18 gave readings and outlook on stocks across various sectors like ONGC, IFCI, Suzlon and fertilizer stocks.
Below is the edited transcript of the interview with CNBC-TV18. Also watch the accompanying video.
Q: What have you made of ONGC so far and do you think the next half an hour things will pick up surely?
A: Tepid response as of now. Considering the provisions that those who want to bid cannot withdraw their offer and cannot lower it, it was all expected that everything will come in last half an hour. But this kind of tepid response was not expected.
Sometimes you need to have considerable quantity getting bid at the level of Rs 290 or something, which is not happening. As of now it is looking very lukewarm, but it will catch on, but for any reason if it falls, it will be a big slap on the face of government as well as investment banker.
Q: What did you make of this news on IFCI? It appears that after many months they are once again trying to re-stroke that strategic sell process. Do you think one should get excited?
A: Yes. It seems to be a refreshing and pragmatic move on part of the government. We have seen that the last move had happened about three to four years back and after that we have seen unilateral actions having happened in IFCI. In spite of having huge value, we have not seen any significant improvement or growth in the operations of the company in the last couple of years. So, the government has realized it. Sometimes it has been observed that the CEO or MD of the company is taking unilateral actions, which have not been too comforting for the government.
So, it seems that now things have been revived. If it happens, it is very positive for IFCI because huge value is lying in the company. If you see their business model, restructured balance sheet, real estate portfolio of 5 lakh square feet (commercial), 7 lakh square feet of residential across the country, 3 lakh square feet in Delhi and good network. The staff has been rationalized. If you have such a clean finance company available on the platter good value can be attributed to the stock, if serious efforts are made by the government to induct strategic partner.
Q: How much of a positive is this news that REpower has gotten a bank loan because we have known that Suzlon has big bond redemption this year to the tune of almost USD 570 million, the stock has spiked up as well?
A: Definitely it is positive for the company. They have a total consolidated debt of close to Rs 13,000 crore including this bond redemption of about USD 600 million. But sometimes you wonder that when the company has acquired 100% stake and REpower has a cash balance of about USD 1 billion or USD 600 million what is the need for going for this kind of debt.
But anyway timings may not be matching. So, there the amounts must have got blocked and the company wanted to rid of this bond redemption liability. Overall it is positive, but the company must make efforts to reduce debts, which is close to Rs 13,000 crore on a consolidated basis, that should get reflected and indicated in the time to come.
Q: On this fertilizer news that came out which companies do you think would be affected because of the lower subsidy rates?
A: This is neutral for all the complex fertilizer makers because this is just a price adjustment. Considering the price prevailing in the global market, government announces the fixed subsidy amount on phosphate, sulfur, potash and accordingly the subsidy is reimbursed.
Suppose if the prices moves up in the global market by about 10-15-20% then modifications on the upward will be made, similar will be the case for reductions. This is going to remain neutral for all complex fertilizers because this applies only to complex fertilizer makers and SSP, MOP makers. I don