In an interview to CNBC-TV18’s Ekta Batra and Mangalam Maloo, SP Tulsian of sptulsian.com gave his views on the Vodafone-Idea merger and also shared his views on the logistic stocks which saw a bit of a spike as the decks have been cleared for GST.
Ekta: It seems as though the Vodafone-Idea deal is done at around Rs 72 per share; that is what we are picking up from sources at this point in time. What are your thoughts on that as well as the other contours?
A: I have been maintaining for all along that this merger is more out of compulsion. If you first take on enterprise value basis, Rs 1,55,000 crore which they have valued for the combined entity, at Rs 82,000 crore for Vodafone and Rs 72,000 crore for Idea, is seen to be quite stretched.
Coming directly on your question of Rs 72 per share as the implied valuation because when the deal was initiated or when the talk was initiated in January, the share price of Idea was ruling at Rs 72. So, if you take a longer call with Vodafone’s stake remaining at 45.1 percent and the Birla Group have the option to increase the stake, because market if I purely now focus because Vodafone was very much interested in going public and get the share listed, they found out this way of getting listed on the Indian stock exchanges.
Now, if you take purely from the Birla point of view, if they don’t increase the stake, then that will be seen negative by the market. If they increase the stake, then also it will be seen negative because if you broadly take a call on the company, Grasim is the only company which remains that can come forward and make investments because Aditya Birla Nuvo will get merged with Grasim in next three months’ time.
So, I think overall, this has been a bit disappointment, the kind of euphoria which we have seen built on the share price of Idea at about Rs 120 where it was thought that Vodafone and Idea will be having the combined equal stake in the company and this will create a very big giant and all that is seen getting waned off now.
Mangalam: A couple of logistic stocks which are gaining, Gati is at the high point of the day as we speak along with Patel Integrated Logistics, that one also saw a bit of a spike as the decks are clear for GST. This was in the offing, and now that this has come by, what exactly do you make of this development?
A: A very positive move and I don’t think now there are any hurdles having seen in front of the GST implementation. Now it is just merely formality, maybe by April 12 it will be approved by the central government and thereafter it will be quickly followed by the state governments because that is just a simple formality.
I don’t think that because now all the eyes will be on July 1 and if you have heard many of the state finance ministers, they have all wholeheartedly said that it will get incorporated because all the states have their Budgets presented and that Budget session is on along with them.So, I think this is just a mere formality. I hope that entire process will get completed maybe by end of May because you don’t need to wait for all the states to get that approval. So, July 1 now seems quite practical and this is a very positive move. Again, we will be seeing one of the biggest reforms post-independence in India.