In an interview to CNBC-TV18, discussing various stocks, SP Tulsian of sptulsian.com said Shree Cements numbers were satisfactory compared to expectations of weak numbers from the pack.
He said as of now for the Q3, he was upbeat on AksharChem India but warned that one must review these kinds of stocks every quarter.
With regards to the new listing PNB Housing Finance he said one can stay invested but does not advice fresh investments. He said, on a relative basis there is still huge value in LIC Housing Finance than this, he adds.
Below is the transcript of SP Tulsian’s interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18.
Anuj: Your thoughts on Shree Cements.
A: Actually, all the cement numbers were expected to be dull for Q2, let us accept that. And in the given situation, I do not think that there is any kind of disappointment, though Mr Bangur has painted the negative picture on the power front, but if you see, the power earnings before interest and taxes (EBIT) for the company at Rs 170 crore, even that is not so disappointing. So, I was not expecting too good numbers from Shree Cement and in the given situation I am not disappointed with the numbers.
Sonia: Crompton Greaves is up almost about 10 odd on the acquisition of that overseas, business to business (B2B) automation business. I do not know if you have had chance to look at that newsflow, but how would you react to it?
A: Excellent news and in fact, this shows the determination of the company to exit from the loss making ventures. If you see, the overseas business have all been a drag on the company and this B2B automation if you see, has not been contributing anything to the earnings of the company. If you see on the EBIT level on a top line of closer to about Rs 800-850 crore, the EBIT was nothing. For FY16, they had a negative EBIT of Rs 6 crore for FY15, they had positive EBIT of Rs 7 crore. And the announcements which company has made about six months back, I am not referring the couple of years back announcements where the hiving off has happened of Crompton Greaves Consumer Electricals, but apart from that, on a standalone business now, they have stated that they will become debt free and it seems to be a step in the right direction. Company does not have much debt now in the books, only about Rs 1,200-1,300 crore and this is a very positive step having taken in the company.
Anuj: When the market was falling two weeks back, you were bullish on Akshar Chem India and it was at Rs 500 then, today it is around Rs 719?
A: That is right. In fact the same stock and in fact if you recall it touched the lower circuit also when I said that maybe at about Rs 320-325 that this looks very good, because this company is again into the vinyl sulphone the story of the theme which we have been discussing. We have seen the results of Bhageria Industries where the profits have almost doubled on a sequential basis on a similar kind of performance is seen from this company also with operating profit having doubled almost from Rs 15 crore to about Rs 28 crore on a sequential basis and I am referring to with EPS of Rs 25 for Q2 against Rs 13 for Q1. And in fact if you see the situation it is very difficult to predict the vinyl sulphone prices because of the China factor, but if you talk to the company because I am on the board of Bhageria Industries, so I have the information and cues of the products or the developments which keep happening.
So, maybe things are looking in fact good for Q3 also because it is very difficult to take a secular call on these stocks on a long-term basis, so you need to review on every quarter and yes, after this stupendous numbers from Akshar Chem, the stock is upper circuit at 10 percent on Rs 700 plus.
Sonia: I wanted your thought son the new listing of the day, PNB Housing Finance. It had a steady listing, 15 percent higher, but from here on, do you see it give any incremental gains?
A: Actually if you see at Rs 890 or Rs 900 maybe those who have got the allotment, I would advise them to remain invested. But if you really want to take a fresh call, I do not think that the stock deserves an investment now for the simple reason because if you see, book value of Rs 340 will be the book value as on March 31, 2017, after six months and I am expecting an EPS of closer to about Rs 35 for FY17 so that translates into a price-earnings ratio (P/E) of 35 and price to book of 2.65. If I take a comparative call, because PNB housing is in top housing finance company. If I compare with the second one, that is LIC Housing Finance which is going to post an EPS of Rs 40 price to earnings is just at 14 times and the P/E multiple is just at 17 times. So, that means, on a comparative basis, you find LIC Housing almost 50 percent cheaper. In size it is almost 4 times. In terms of the bottomline, PNB Housing is positing a bottomline of Rs 400 crore. LIC Housing is posting at Rs 1,600 crore. So, maybe in due course of time, in the near-term in the next couple of days, this is going to get realised by the market and LIC Housing in fact, as I said, on a comparative basis, on a relative basis, I find huge value in LIC Housing rather than PNB Housing now at the level of Rs 890-900.
Anuj: Have you studied Shriram EPC that stock is up 51 percent this month?
A: I have not seen in detail, but I am not keeping the positive view on the stock for quite some time. However, I have not honestly gone through the recent analysis of the stock.