Be wary of FMCG; bet on UB, Cummins and Jet: Tulsian

Tulsian is also positive on market-favourite Cummins and Jet Airways on increased expectations after SpiceJet posted positive results.

Below is an edited transcript of the analysis on CNBC-TV18.   

Q: What do you make of the PMO statement and what impact, in your opinion, will it have on some of the companies involved?

A: The statement is an indication of putting the government's house in order. For an example, the steel ministry had to lock horns with the mines or the coal ministry for access to land.

Similar is the case with the coal ministry's inability to get land due to environment ministry’s refusal to grant it. The scenario led to a lot of clashes within the government.

However, I'm not hopeful regarding the development of the surplus Railways land. Objections by the unions and other bottlenecks will prevent any such plan.

So, yes, this is a baby-step towards a scenario when clearances will be granted faster to allow PPP projects to be completed on schedule. I hope that the whole process will be smoothened out within PSU and the government realm.

Q: A word on Hotel Leela ?

A: The company sold its property at Kochi to an NRI connected to the promoters and enable a gain of about Rs 450 crore. Considered in light of the company's debt situation of Rs 4,000-4,500 crore and interest liability of Rs 50 crore per month, I don't think the company's EBITDA margins are very respectable.

Q: From the list of UB Group stocks, which one would you trade in right now?

A: There are only two stocks on which investors need to take a call- United Breweries and United Spirits . The effect of the rise in share prices of United Breweries, United Breweries Holding and McDowell Holding , is consequential because both are investment arms.

I don’t think that one can really take a call on Mangalore Chemical , UB Engineering or Kingfisher Airlines.

The interest in the twins - United Spirits and United Breweries-  ultimately lies in reference to the sale of stake. Now, it has to be seen whether the sale of stake happens first in United Breweries in which the promoters hold 37.5% with foreign promoters owning equal stakes are very keen to acquire this stake.