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Jun 12, 2012, 08.43 AM IST
Tulsian of sptulsian.com explains to CNBC-TV18 that the power sector rose to the occasion on reports of a government bailout package. The stars of the sector, Tulsian says, are Adani, Tata Power and GVK Power.
In his analysis of the day's trading on CNBC-TV18, SP Tulsian of sptulsian.com explains that the power sector rose to the occasion on reports of a government bailout package. The stars of the sector, Tulsian says, are Adani , Tata Power and GVK Power .
Below is an edited transcript of the analysis on CNBC-TV18. Also watch the accompanying video
Q: What are your thoughts on Hindustan Construction ? The company plans to sell non-core assets to raise funds and also restructure Rs 3,500 crore of debt.
A: Any kind of positive news such as monetisation of non-core assets and debt-restructure is always well received by the market especially for a company under stress.
But my call on Hindustan Construction is not very positive. Looking at the the long-term debt of Rs 4,800 crore and short-term debt of Rs 2,500 crore, excluding the trade payables liability, the total debt is at a significant amount of Rs 7,000 crore.
Though there are positive new reports flows on CDR being admitted in the last week of March 2012, the final approval is awaited.
It outlook turns gloomy, despite piecemeal reports of Rs 850 crore in Lavasa being restructured or rescheduled, when one views the consolidated picture of the company.
The source of HCC's problems lie in its subsidiaries, especially Lavasa. So one has to understand what kind of non-core assets are to be sold looking because I don’t think any exist in the case of Lavasa where a big parcel of land can be monetised.
Can that really significantly generate an amount of Rs 500 crore which will really provide a breather?
All these factors raise a question mark on the share. But yes, in the short-run bits of positive news does infuse some confidence into the stock as seen today. So maybe at Rs 22-23, the stock is likely to invite profit-booking. It is risky to enter this stock from an investor's point of view at the current level.
Q: Do you have a similar theory for Suzlon as well? The company plans to raise loans to refinance its FCCBs. The stock fell in the last three months from Rs 31 to Rs 18. Do you think there are problems of confidence as well?
A; The company's deadline for repayment of a liability of 350 million of FCCB falls on Tuesday, But there are news reports that an extension of 45 days has been agreed upon after the company sought an extension a couple of months ago.
Currently , there are reports that the company is looking to raise an additional over-300 million of fresh FCCB to repay this liability of over 350 million FCCB. But this increased debt in the books gives little cause for worry because Suzlon controls REpower, which is currently valued to the extent of USD 2.5-3 billion and that comforts creditors while lending to the company.
Suzlon needs to improve margins and that could improve the situation quickly. The stock has corrected from over Rs 30 to about Rs 20 in the last couple of months. There also was a swift rise from Rs 20 to Rs 30 as well in the preceding two months. So I'm comfortable in taking a long-term investment call on the Suzlon than on HCC.
Jun 19 2013, 23:15
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Jun 19 2013, 12:44
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