Market expert SP Tulsian of sptulsian.com is positive on stocks of housing finance companies some of which performed well on the bourses during the day. "If you want to have a positional view either as an investor or a trader, then DHFL, Indiabulls Housing and LIC Housing," he advised.
Below is the transcript of SP Tulsian’s interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18.
Anuj: I wanted your thoughts on a couple of these Tata Group stocks. Tata Global is up 3 percent, Tata Coffee is up. So, these consumption stocks of Tata Group have done well. Do you think these stocks can rally more? They corrected heavily after that Cyrus Mistry’s sacking.
A: Maybe just a technical bounce-back because honestly, if you really ask me, I do not understand that merely the announcement of Tata Sons Chairman how these things will help to this consumption story because if you really see this, particularly both the consumption play that is Tata Global and Tata Coffee, they have become more trading stocks in a particular, in a given range. As you have said that after the Cyrus Mistry saga, we have seen them correcting. But if you take a track of this all stocks, both the stocks for the last couple of years, I do not think they have rewarded, in fact, they have seen the giving loses only to the investors. They go up and swiftly correct back also. So, I will not be taking any positive view on both the stocks because as such for last maybe one year or so, after seeing this disappointment of last 2-4 years of both the stocks, I have been keeping a neutral stance on both the stocks.
Sonia: How do you approach names like DCB Bank now ahead of its numbers tomorrow? Any thoughts there?
A: Firstly, I will not take a call ahead of the numbers. Number one, it is not that I am expecting bad numbers from the bank because banks more or less have all stabilised, whether you take a private sector or a public sector. And even for Q3, as stated earlier, I am not expecting any kind of shocker to come in at least from the private sector bank because of this demonetisation. But, I have always been maintaining that DCB Bank is seen to be the most expensive amongst all the private sector banks for the reason I do not know. Maybe because we have been hearing for last 4-5 years that this is seen a takeover candidate. HDFC Bank is looking to buy it. But I do not think that merely on that pretext you can give such a high evaluations to the bank. So, I will not be taking any positive call and for the time being I have a neutral view on the stock.
Anuj: Your thoughts on Reliance which of course, comes out with numbers on Monday. Are you expecting another good quarter and more importantly, after the kind of rally that we have seen in the stock, what is the call here?
A: This time, Reliance Industries’ numbers have to be read in a very what you call minute way because what we have been estimating that the two segments. In fact, if I take the core operation, the two segments, petchem, I am expecting a sequential drop in the earnings before interest and taxes (EBIT) from Rs 3,400 crore to Rs 3,200 crore, but refinery should show a rise of about, the EBIT should rise from about Rs 5,975 crore to Rs 6,770 crore. For simple reason, if you see, there has been, the Singapore benchmark has risen to about USD 6.7 per barrel for Q3 which was at USD 5.1 per barrel. apart from that, there has been an inventory gain of about USD 4 per barrel. And if you take the one week’s inventory being held by the company, that gives you effectively about 0.2 percent as an inventory gain also. So, we are expecting a gross refining margin (GRM) of closer to about 11.6. So, what my point is that you will be seeing profit before interest and tax of about Rs 9,900 crore against Rs 9,200 crore. But maybe below this, that is interest expenses, lower other income and higher taxation probably may see the profit after tax closer to at about Rs 7,455 crore against Rs 7,176 crore what we have seen for Q2. So, these are our estimates which we have worked it out.
Anuj: Your thoughts on IL&FS Transportation Networks (ITNL).
A: Actually, I have a neutral view on the stock because if you see, the stock has never performed in this last one year. And when you talk to the industry experts, probably they are holding concerns on the few road projects which the company has been owning. So, because of the lack of confirmations on the quality of the assets which they are holding on the build, operate, transfer (BOT) projects, I will not be taking a positive call on the stock.
Anuj: Today has also belonged to housing finance. HDCF is up 2 percent, Indiabulls Housing Finance is 3 percent, even Dewan Housing Finance Corporation (DHFL) has looked good in trade. So, a couple of these stocks have looked good. What would be the pecking order in this space?
A: DHFL, Indiabulls Housing and LIC Housing. Probably I will go with three. Maybe LIC Housing, if one can wait for the results to come in the next three days, I think it is scheduled on January 16, but I not too much worried on the results. So, still if you want to have a positional view either as an investor or a trader, then DHFL, Indiabulls Housing and LIC Housing.
Anuj: Idea Cellular looks like there is no bottom in place. Could this really go Reliance Communication’s way because it is an index stock and a very large company? Your thoughts on the stock.A: If you want to ask me in terms of the price, I will not be surprised to see the price of Reliance Communications coming in. But at that point of time, what will be the price of RCom, it is difficult to predict at that point of time. But coming on the telecom space, I have been keeping the negative view because if you see now, just a small news piece, in respect to Idea, they have raised the money through the short-term instruments, commercial paper, I do not remember of Rs 2,000-2,500 crore that indicates the liquidity crunch at their end when the financial performance have started showing a drop of about 80-90 percent in the bottomline over the corresponding whether you take on a quarterly basis or a yearly basis, those are really sending the alarm bells. And if you see, going forward, margins will be usually under pressure, every quarter will keep disappointing which will definitely be seeing the share price coming down every month or every quarter. And I will not be surprised to see the share correcting to the level of Rs 50 in the next one year or so.