Bearish on Tata Steel, Jet Airways, VIP Inds: SP Tulsian

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 Tata Steel BSE | NSE 31/05/12 Are Mutual Funds betting on Tata Steel? Other Stocks in this news Jai Balaji Industries | Jet Airways | VIP Industries | Delta Corp | Jain Irrigation Systems | Sterling Biotech |

SP Tulsian of sptulsian.com is bearish on Tata Steel , Jai Balaji , Jet Airways , VIP Industries and Delta Corp .

Also read: Will pain in Allahabad Bk, Jain Irrigation, Orchid persist?

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

Q: What is your call on Tata Steel?

A: No. The Q2 results have been a great disappointment, especially from its overseas operations. Rs 65,000 crore of debt is sitting in the books. Tata had paid similar amount for acquiring Corus Steel.

Now, Corus has been dragging down the consolidated results. The standalone operations or the domestic operations have been very good of the company. But I don't think that respite is seen coming from the European operations.

It is almost over four years that they have not been able to do anything. The overseas operations are very huge. It is possible that the company may lose about Rs 1,500 to 2,000 crore per quarter. So, probably the stock can fall to about Rs 300.

Q: Jai Balaji was Rs 270 when we started the year and now the stock is Rs 35. What is your view on this?

A: This stock has never been my favourite. Two-three foreign institutional investors (FIIs) were very bullish. I have seen them recommending this stock saying they have huge coal mines allotted to them.

If you see their product mix, I think it is ruling at about close to 52-week low because the equity is at about Rs 60-70 crore. But if you see the integrated operations of the company, they are into wire rope making, steel billets making and sponge iron operations.

In the wire ropes, I am trying to focus on three companies - Usha Martin, Ramsarup and Jai Balaji. The performance of all three has been horrible for first six months of FY12, they have lost such a huge amount.

Usha Martin lost about Rs 300-400 crore, Ram Swaroop industries has practically got wiped off. Those two are pure wire rope making company. But this is an integrated one, but the wire rope has been a big drag.

If one looks at the Q2 results, they have posted net loss of close to Rs 55-60 crore on a equity base of an equal amount. If you have these kind of performances, probably they may close the year FY12 with a negative EPS of close to Rs 25-30. I have negative view on the stock.

Q: What about Jain Irrigation ?

A: I have been taking a fundamental call on the stock. I am tracking it closely, but I never thought that it can reach to two digit levels. Sometimes you are unable to find the real problem. I have no answer for this fall.

Q: Sterling Biotech is down 20% at Rs 37, do you see this one coming?

A: I have cautioned on these stocks- Sterling Biotech and Sterling International. I don't see any substance. If you see Sterling International, it has marketcap of 5,000 crore. These are operated driven stock. I am not surprised to see fall in these kinds of shares.

Q: Jet Airways has shaved off from 75-80% of its values since the start of the year. Do you think there is some more downside for aviation stocks like Jet Airways or do you think there would be some value buying emerging at lower levels?

A: I don't think any value buying is likely. Why will anybody take a risk in a sector like aviation?

Jet Airways has a debt of close to Rs 14,000 crore. If one goes by their Q2 performance, it is a victim of the rising fuel prices and all along it had been operating at plant load factor of about 75-80%.

So, I don't understand why one should be taking a fundamental call. I don't see any reason of fundamental interest to get revived in these stocks.

Q: Do you see some more downside for stocks like VIP and Delta Corp?

A: Yes. The long position, which we are seeing of the retail traders in futures & options space, coupled with the delivery based selling is making them very weak.