Avoid HMT, ITI, FACT and Neyveli Lignite: SP Tulsian

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Avoid HMT, ITI, FACT and Neyveli Lignite: SP Tulsian

SP Tulsian, sptulsian.com says, one should avoid stocks like HMT, ITI, FACT and Neyveli Lignite.

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Excerpts from Closing Bell on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets HMT BSE | NSE 31/05/12 Are Mutual Funds betting on HMT? Other Stocks in this news ITI | Fertilisers and Chemicals Travancore | Neyveli Lignite Corporation | Rashtriya Chemicals and Fertilisers | National Fertilizers | State Trading Corporation of India | Hindustan Copper | MMTC Ltd | Everonn Education | Gujarat Narmada Valley Fertilizers Company | Chambal Fertilisers and Chemicals | DCM Shriram Consolidated | Lanco Infratech | GMR Infrastructure | GVK Power & Infrastructure |

SP Tulsian, sptulsian.com says, one should avoid stocks like HMT , ITI , FACT and Neyveli Lignite .

According to him, RCF , NFL and STC look interesting. Hindustan Copper and MMTC , he says, are purely moving up because of the low float. "I don't think that these kind of valuations are really justified. On a fundamental basis, MMTC is ruling ten times of its fair value. Hindustan Copper is ruling 100% more on its fair value."

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Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy. Also watch the accompanying videos.

Q: What did you make of the move of Everonn , 20% up now?

A: We all know that the Varkey Group has already completed the open offer. Earlier, there were apprehensions that whether the open offer will really come through or not. It seems a foregone conclusion that the James Group or the Varkey Group have really taken a big view on this stock. That is likely to be a big breakthrough for the stock because they are going to be very aggressive. They are going to infuse huge funds. All the education sector stocks require huge amount of working capital, maybe stocks like Educomp have not been able to cope up with that kind of cycle.

One has to be very careful because on January 14 we will be receiving back all the shares which have been tendered in the open offer. After that, we may see some mild corrections because that depends on the acceptance ratio in the open offer and then subsequent selling thereof by the residual shareholders. So, these factors need to be kept in mind.

Taking all this into account, I think at Rs 400 share should take some breather. I don't think that this has really legs to move past Rs 400, even in this rally.

Q: What are your expectations for January 16 meeting between the FM and the sugar companies as seems to be reported today?

A: I think this is a foregone conclusion. In the recent policy moves, nobody wants to take the blame or the responsibility of any liberalisation or any relaxation. It is a rigorous process. So this seems a foregone conclusion that levy sugar of 10% has to go.

We all know that between the levy and free market price there is difference of Rs 10 per kg. Levy is sold at Rs 19 plus, free market price is Rs 29 plus. So, Re 1 straightway gain on the entire production will be made by all the sugar companies. That is positive.

Second relaxation, which again seems quite certain, is the dismantling of the release mechanism. I don't think that monthly release mechanism has any meaning and substance because that has been putting a lot of burden on the sugar mills. So, these two things are almost certain.

I don't know whether these things can really get announced by the government in this model code of conduct. I don't think that is likely to happen because sugar is a very major play in the UP state. So, these two things are bound to come, but I don't know about any conditions or any bar on the ministry to go for these two relaxations. But these are bound to come. It's just a matter of time.