In an inteview with CNBC-TV18, SP Tulsian of sptulsian.com, explains why he likes the housing finance space, especially PNB Housing and LIC Housing. He also gives his views on various other stocks like Advanced Enzyme and HPCL.
Below is the verbatim transcript of S P Tulsian’s interview to Sonia Shenoy & Anuj Singhal on CNBC-TV18.
Anuj: I first wanted your thoughts on Advanced Enzymes. This is a stock that you track what did you make of the numbers and the market’s reaction?
A: Very disappointing numbers, in fact if you see probably market has had this whiff of the bad numbers coming in and if you see the stock performance probably for the last one month it has been correcting. But purely going by the quarter three numbers there has been a big disappointment. In fact after hearing the management also the confidence has not seen coming in because the body language or the commentary seems to be quite muted of the management as well. Those who have been holding the stock and many of them have entered at the high price as well may be at a level of Rs 1,800 to 2,000 seems to be all exiting now, but purely from the results point of view it is a big miss.
Anuj: HPCL 5.50 percent lower. Do you think it is the case of stock having run-up too much and then seeing profit taking or were the numbers genuinely this bad?
A: I don’t think that numbers were really disturbing. This could just be the profit booking because the kind of run-up which we have seen in the OMCs ahead of this quarter three numbers. If you take a call purely on the fundamentals I don’t think that the kind of run-up which you have seen was warranted. So, this profit booking is coming after say like sell on news kind of things. I don’t think that the number in any way have been disappointing.
Sonia: What about some of these housing finance companies – PNB Housing is one stock that has moved only one way and that is upwards since its numbers. I know you track this space with a lot of interest. If someone has missed out is there still potential to buy into some of these stocks like PNB Housing?
A: Definitely, I have a positive view on all the housing finance companies. Coming, specifically, on PNB Housing if you take a comparative call because generally what happens I am not saying that this is not supported by the fundamentals. But, generally, what happens with a company having gone public recently or having come out with IPO recently sometimes you see these kind of momentum play keep happening.
If you take a call on the relative valuation basis definitely PNB Housing is showing probably the fastest growth. However, the valuations are also looking quite stretch; maybe on a price to book things are not looking very expensive, but on the EPS front or maybe PE multiple front this looking bit expensive. So, I am keeping a positive stance on the housing finance companies, but will refrain from buying the PNB Housing I won’t hesitate in booking the profits in PNB Housing and taking a shift in the stocks like LIC Housing or maybe Dewan Housing Finance or maybe Can Fin Homes.
Anuj: Your thoughts on Tata Motors?
A: As such market was expecting that the Indian operations will be seeing disappointment that has come. But the disappointment of the JLR is seen to be quite high. But as Sonia has analysed that apart from that if you add the tax liability also if you see for the quarter the taxation provision is seem to quite high at around Rs 880 crore, so one has to understand that also that why the taxation liability has been on a consolidated, results has been quite high, so that could also be just an additional negative for the stock. But having seen generally, when we have seen many of the negatives having played for the stock it has not corrected beyond a point and I think that Rs 490 seems to be good support. Maybe the price having factored in all these negatives will not see much weakness going forward.
Sonia: What would your final word be for long-term investors who have been holding the stock for so many years ever since JLR started to perform should they start to panic now and exit or do you think that they should just wait and watch for things to settle?
A: If I just take a one year background, in fact there maybe five or six occasion where we have seen the extreme views being taken. At one point of time I remember I don’t recall the amount whether it was Rs 1,30,000 crore or Rs 1,40,000 crore where the market cap of Maruti Suzuki and Tata Motors were same and many of the expert were seen given buy call on the Tata Motors. At that time I used to differ that prefer Maruti – number one.
Number two – we have seen that valuation – I have heard you saying about the BMW valuations and all that, but those kind of valuations or the concerns were seen existing at that point of time also. Number three, definitely the standalone numbers or the domestic numbers have seen a big disappointment. I am not too much worried on the JLR numbers because the top line is seem maintained, yes the margin pressure nobody can dispute so overall we have seen the stock bouncing back equally well as well.
If you see, honestly I was not expecting it to fall below may be Rs 480-485 and I have discussed the numbers and it corrected to Rs 470, it can fall to a level of Rs 450 also maybe tomorrow once you see the panic reaction coming in. But again I don’t think that much weakness is seen in the stock even from the current level of about Rs 470-475. I will give a buy call because looking to the kind of bounce back which we have seen swiftly coming back as we have seen in the past.