Apollo Hosp, JSW Steel, Pantaloon: Find out Tulsian's take

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In an interview to CNBC-TV18, SP Tulsian of sptulsian.com, shares his expert calls on the buzzing stocks of the day - Apollo Hospitals , JSW Steel and Pantaloon . He says the upside move in Apollo Hospitals could be attributed to the possible stake sale. Further, he believes the FDI in retail reform has gone to the backburner, and hence, expects Pantaloon falling lower.

Below is an edited transcript of SP Tulsian's interview. Also watch the accompanying video.

Q: Apollo Hospitals is a stock that hasn't moved anywhere in the last 5 months but November onwards it has seen a big spike in trade. Is there anything that you are spotting there?

A: Unconfirmed rumours of Khazana likely to acquire the company or a possible stake sale has been floating for last about week to ten days, and whatever upside that we have seen has come in this last 7-10 days alone. So, the reason can only be attributed for this news where Khazana is likely to acquire the company or may be some kind of stake sale by the promoters.

Q: What did you make of the JSW Steel management comments that the promoters will not be converting the warrants? They will forfeit that Rs 500 crore that they have paid earlier and the stock has reacted 4-5% today?

A: I don't think that there is any surprise but the confusion is that 15 days before the warrants were subscribed on 16 June 2010 and that 18 months validity is expiring on 15 December 2010. We get to hear those warrants have given an entitlement to the promoters to subscribe at Rs 1,210 per share and 1.75 crore warrants were subscribed.

So, I don't think that it was a foregone conclusion. We have seen these kinds of things happening in case of Reliance Infra and all that where the promoters have foregone their rights to subscribe. Hence, it was expected that no management will be there and there is no prudency on part of the promoters to pay extra Rs 1500-1600 crore additional, because they have already paid Rs 530 crore.

It would have been prudent on part of the promoter to make that announcements may be quite early, may be couple of months back because otherwise after 15 days we would have come to know the fate that the warrants have not been subscribed. And they have got less than Rs 530 crore paid by them has come into the company's kitty which had been forfeited.

Q: Do you see Pantaloon falling more? It has already lost quite a bit of ground but would you buy it here at Rs 187?

A: I don't think that you are going to see the clearance of FDI in retail in the near future. Probably this again has gone into the backburner and in that situation we have seen Pantaloon falling to as low as, in the recent past may be about Rs 160-165. So, I don't think that the share seems to have bottomed out. We can definitely see a price of Rs 170 once the confirmation, which is likely to again be negative or may be neutral to negative on Wednesday, which can correct the stock to about Rs 170 probably in this week itself.

Q: What did you make of the move on Ashok Leyland ?

A: I don't think that there is any complaint from the numbers but the problem we have seen with this stock is that rally is not sustainable. Whenever it moves by any of the short term news, either it gets fizzled out may be because of some disappointment either on the results and all sort of things and considering the commercial vehicle I don't think that one can really be too comfortable or too confirmed on the growth, going ahead.

If you are taking a call on the good growth of commercial vehicle then probably Tata Motors will be taking the lead compared to Ashok Leyland. Even on the valuation parameter, Ashok Leyland still looks quite expensive when compared to Tata Motors and Tata Motors has the risk spread into the passenger vehicles, as well as commercial vehicles. Hence, taking both into consideration Ashok Leyland witnessed a short term technical rise today.

Q: Parsvnath and HOEC, you think the worst is over for them and if you had to bank on any of them would you?

A: If you take a call on Parsvnath, probably the financing or the margin call which we have seen to the extent of about Rs 1 crore shares seems to have got over. It is the reason why the share has bounced back. It corrected by about 50%. It fell from may be about Rs 65-66 to as low as Rs 30-32 and now for last three days since that deal seems to have happened, which we get to know from the volume taking place on the exchanges, we are seeing again the renewed interest coming back in the stock. However, ultimately on a net basis we are going to see the value erosion in the share price because I am expecting it to settle at about Rs 48-50.

Coming on the next stock of HOEC this has been a trader's favourite stock and whenever we see this stock moving up, it continuously moves on and it goes up and suddenly it corrects. I don't think that there are any fundamental reasons to justify. This is a pure traders stock and is driven more by the trading parameters and trading forces and I think from hereon it looks quite risky because it has run quite a lot from may be about Rs 108-110 in last week to 10 days or so.

Q: What about Crompton Greaves , it has been seeing a little bit of a pullback at Rs 137 now? How does that one look?

A: Overall, there is positive built up happening in respect to the capital goods. In fact if you see the stock, whether you take the call on L&T and ABB, two of the stocks have been doing quite well and may be in the smaller space like Crompton Greaves and Thermax. I have seen renewed buying coming in both the stocks.

I am not including BHEL in that category because you have the fear of suddenly one day you will see FPO news again remerging. So, these 4 stocks indicate that probably the reemergence of interest in the capital goods is happening and infact I have been maintaining my positive view on Crompton Greaves because it has corrected to as low as Rs 110-115.

So, may be till next, we get to see the next results by 3rd week of January, the share has potential to move to about Rs 150 and at those levels it should really settle and consolidate.