With RIL’s results coming up next week, profit expectations are plus or minus Rs 50 crore of their Q3 PAT figure of Rs 5500 crore, says SP Tulsian of sptulsian.com.
Talking to CNBC-TV18, he says that though there has been a fall in the production of the gas which is now settled at 16 mmscmd that has already been factored in the scrip’s price. He says the stock’s price could touch Rs 800 plus after the announcement of the results.
Another important event to watch out for next week is the Supreme Court hearing on Monday the Sunil Bharti Mittal and Ravi Ruia case.
Also read: Expect RIL Q4 profits to be flat: Edelweiss
Here is the edited transcript of the interview with CNBC-TV18
Q: Reliance Industries earnings are on April 16. How are you approaching that particular trigger and the stock itself?
A: I am not expecting any kind of negatives from the company. Maybe they have posted a profit after tax (PAT) of Rs 5500 crore for Q3. I am expecting that to be somewhere between plus or minus Rs 50 crore, because if you really see the gross refining margins (GRMs) are likely to be more or less flat on the lines what has been posted for Q3.
There is a fall in the production of the gas which is now settled at 16 mmscmd, but that has already been factored into the price and petchem I am expecting a marginal improvement.
So, if you take the sum of all this and maybe the finance activities which have been contributing to a great extent to the bottom-line of the company, this is likely to be at the same level. The kind of corrections which we have already seen may be as a cautious stance ahead of Q4 numbers, and probably it may not make the stock to go down further. So, keeping a positive stance, I won’t be surprised to see a price of Rs 800 plus after the announcement of the results.
Q: What are the events to watch out for next week apart from the Reliance results?
A: The Supreme Court hearing on Monday in case of Sunil Bharti Mittal and Ravi Ruia is very important, because the market will definitely be closely watching that. That will have far-reaching implications if any relief is announced by the apex court. That will be seen positive by the market and we can see the up move coming into Bharti.
That has been a favourite stock for traders as well as of the investors. So, this is the main event which we will be looking for, apart from the results. Lot of tech results are lined up in this week. We have Tata Consultancy Services (TCS), HCL Tech, Wipro, CMC, so, the whole week is loaded with tech companies announcing the results.
Q: Balrampur Chini is in your buy list. The government has now made it mandatory for sugar mills to sell ethanol to oil companies at Rs 45 per litre. How much of a positive do you think that would be for companies like Balrampur Chini and what would your strategy be there?
A: After scraping the levy of 10 percent, this second relief or the contracts all the oil companies have entered into with the oil marketing companies, I see as a big positive. UP mills have entered at Rs 34 per litre. Karnataka has entered at Rs 36 per litre, Tamil Nadu at Rs 35 per litre and Balrampur Chini is the most efficient unit.
They may have the second-largest capacity in terms of the crushing and the molasses capacity, but they are the best managed. In fact I see that as quite positive, because the regular lifting of ethanol will not put pressure on their cash flow and they will be able to process the molasses faster, which otherwise they have to store it for a longer time.
If you really see the scenario part of the quantity will definitely get sold by them in the open market also. So, a significant portion are getting diverted to the oil marketing companies from blending which is becoming mandatory from June this year, I am seeing that as quite positive for the sugar sector.
Probably the blending may get extended by about a month or so because this contract finalisation has been delayed. I am taking an overall positive view on the sugar sector, but Balrampur Chini looks the most promising amongst the lot.
Q: Any other buy calls that you would have for next week?
A: I have chosen 2-3 event-based stocks. One is Videocon Industries, where the management has confirmed that they are likely to consummate the deal for sale of their 10 percent stake in the oil and gas overseas block which they have been holding. If that happens, that can make the stocks to move up by about 5-7 percent in next 2-3 days because next week is a truncated week. We have the market working for only four days.
The second stock which I have chosen is the Career Point. They started Career Point Gurukul, their residential coaching campus with 1500 students with an outlay of Rs 50 crore. So, that is going to definitely ramp up the income of the company on a regular basis, which can make the stock move up further because already the stock has been beaten.
Third one is a contrarian call. You can call it as a bold call, is the buying call on CMC ahead of their numbers. This is a 51 percent TCS subsidiary and they will be announcing their numbers on Monday. Generally for last three quarters we have seen that the company has been posting the good numbers. Q3 numbers was little subdued.
In spite of that, the stock has seen an up move. May be in next couple of days we can see the share moving up by 5 percent from the current levels. So, these are the few ideas which are based ahead of the events which are lined up for all these companies.