SP Tulsian of sptulsian.com is positive on BGR Energy, BHEL, L&T, Thermax, ABB, Siemens and Cummins in the long-term. He is also positive on Hathway Cable, WWIL and Den Network.
According to him, ONGC may correct to about Rs 280 to Rs 285.
Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video.
Q: BGR Energy is the L1 bidder for NTPCís tenders. What are your thoughts on BGR Energy? How do you expect the stock to move from hereon? Do you expect the bidding to be extremely aggressive? That is one concern which is highlighted because BGR-Hitachi up until now I donít think it has won any kind of a boiler tender. So, it might go with aggressive bids hurting the margins of the entire industry?
A: BGR already has moved by about Rs 100 in the last one week or so. BGR has been purely an EPC player and with concentration in Tamil Nadu and Rajasthan states. If you see their order book, after their JV with Hitachi, they have become very aggressive. It is very difficult to say what kind of margins they will be having. But out of those 11 boilers tenders for 660 MW, it was earlier expected that five of them will go to BGR Energy and four of them will go to BHEL and maybe one can go to L&T and one to the fourth party.
Now, the indications are coming that it could get shared between BGR and BHEL only, six and five. But I am keeping my positive view, maybe after this news we may have some concerns on margin picture. For longer term, I am keeping my positive view.
Turbine boiler and generator manufacturers are going to see huge rush asking for delivery by all the power generator or thermal power manufacturers because they have to catch the deadline of March 2015. They will be asking delivery of all these three TBG by June or June to September 2014.
If you see the pipeline of all these companies, they may not be having the incremental order inflow as of now. But they are already sitting on a pipeline of next two-four years orders, which can get executed and accelerated by these companies. So, I continue to have my positive views on capital goods makersó BGR, BHEL, L&T and maybe the other smaller players like Thermax, ABB, Siemens and Cummins etc also.
Q: As a retail investor, how do you approach this entire ONGC auction? Should a retail investor participate? What kind of a price range do you see the stock at from hereon?
A: If you see the IPP guidelines announced by the SEBI institutional private placements, the retail investors are prohibited, only the qualified institutional bidders (QIB), mutual funds and insurance companies can participate. Twenty five percent of the portion is reserved for insurance companies and mutual funds and 75% will go to QIB. So, this is not meant for any individuals.
Individuals will not be able to participate. But I donít think that there is any rush for the retail investors. They wonít be a serious buyers or maybe of the sizeable quantity. I donít think that one should really go for this kind of euphoria.
Tomorrow, even if on the price priority basis if the auction happens, Rs 305-290, I am taking the extreme scenario then also they should not just jump into the fray to lap it up. We may see the stock getting corrected again to about Rs 280 to Rs 285.
The retail investors can keep ONGC on their list. Whenever they see a price of that falling to Rs 275-280, they can make an entry into the stock at that level. There is no point in unnecessary riding on this euphoria at this stage because the QIBs have their different ball game.
I donít think that retail has any relevance. This is non relevant for the retail category, this whole auction. I donít think they should take a buy call, since the stock has already run up beyond Rs 290-295.
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