SP Tulsian explains why he is bullish on TVS Motor. He also discusses his favourite stocks, namely Bharat Forge and Bajaj Finance.
Below is the transcript of SP Tulsian's interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18.
Anuj: Is Cadila Healthcare under your coverage? Do you track it and your reaction on the news?
A: Excellent news and in fact, you can say that the Moraiya facility has been the backbone for the company and if you are getting a clean chit from the US Food and Drug Administration (FDA) and I will extend this news a bit further that if you see, if you take a call because of Trump coming in and all that, we have been keeping an IT and pharmaceuticals on the watchlist or maybe on a negative bias and probably now, people will start taking, analysts will start taking a call on all the pharmaceutical stocks that is this the process or change in the mind-set of the US FDA here on.
I am not saying that there may be some stringent kind of norms which were earlier used by the US FDA. But this will definitely be seen as a move also taking a positive view and the hopes will start building up that probably the similar type of clearances or clean chit will be seen available to many of the companies. But yes, coming specifically on Cadila, this is seen highly positive, but that stock is also seen having considered the whole upmove, it is up by about 15 percent, so I will not give a buy call on the stock, but definitely will start looking to the other pharmaceutical stocks facing similar kind of situation.
Anuj: Your thoughts on two of your favourite stocks, Bajaj Finance which is up 4 percent and Bharat Forge which really has been the stock of the last 10 minutes.
A: Extremely positive on both because first if I take Bharat Forge, we have been practically discussing every week and I have been every time giving the positive view, but yesterday, if you see the Israel Aerospace company having signed that deal, in fact defence is the big theme. We are seeing Bengaluru things are going on and actually that could be seen as a kicker and based on that, yesterday's signing, we have given a buy call also to our members in the morning. I am keeping a highly positive bias on the stock going forward, number one.
Number two if you see the renewed buying coming in, in all the non-banking finance companies (NBFC) whether Capital First and in fact practically, all the NBFCs have started moving up. So, in that situation Bajaj Finance has to take a lead because Bajaj Finance is the leader amongst the NBFC space with the strongest fundamentals. And I have always kept the positive view during demonetisation also, my prime pick was Bajaj Finance when it was corrected about 15-20 percent. So, going forward, if you are a mid-term investor with a view of about 6-12 months, you need to keep a positive view on Bharat Forge and Bajaj Finance, both.
Anuj: What is happening with the Jaypee Group stocks? Is this some deal brewing up that the market is getting excited about? We have seen a big rally for example in Jaiprakash Associates from Rs 9 all the way up to Rs 14.
A: You get to hear a lot of rumours and all that. Maybe one private equity (PE) investor, I do not know how far, how much you have to rely on, but since you have been asking it because company has broadly sold their cement assets and maybe the power assets. Now there is a talk that one big PE investor who has been very aggressive in investments into the cement companies and all that, they are giving a combined or a composite offer to acquire the residual assets. And are in talks with the banks because banks are also now finding it difficult to monetise their residual assets which are all scattered in the form of hotels, cement, road projects and all that. So, maybe in anticipation of that, things may be happening, buying is seen in all these stocks, but difficult to substantiate.
Sonia: From the auto space, these are stocks that you have been tracking for a while. What are your thoughts on TVS Motor Company? Any idea on what could be the reason behind the rally, a sudden surge there and now in the last six months in fact, it has gone from Rs 250 back to Rs 420. So, a huge move in TVS Motors.
A: No specific reason is known, but actually if you all recall for the last six months, this was my prime pick amongst the two wheeler and now, what the street is expecting that maybe from the month of February onwards, the best kind of sales performance, monthly sales performance amongst the two-wheeler space could be seen from TVS Motors, so that could be and I do not know, maybe the company has also announced the second interim dividend board meeting along with its holding companies, Sundaram Clayton on which we have also been keeping a positive stance because Sundaram Clayton is holding 57 percent stake of TVS Motors, the single promoter company. So I do not know the specific reason honestly, but we have been keeping a positive stance on TVS Motors and Sundaram Clayton, both for the last one year or so.