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Oct 28, 2010, 10.42 PM IST
SP Tulsian of sptulsian.com, in an interview with CNBC-TV18, spoke about his top stock picks and his outlook for the market. Below is a verbatim transcript of his interview with CNBC-TV18ís Udayan Mukherjee and Sonia Shenoy. Also watch the accompanying videos.
SP Tulsian of sptulsian.com, in an interview with CNBC-TV18, spoke about his top stock picks and his outlook for the market.
Below is a verbatim transcript of his interview with CNBC-TV18ís Udayan Mukherjee and Sonia Shenoy. Also watch the accompanying videos.
Q: The big mover yesterday was BS TransComm. Have you tracked that one and what have you made of it post listing?
A: The issue looks quite good. If one sees their business model, they are into power transmission and they have the backward structural mill also. In fact in the current financial yearís first quarter, they have posted very good results.
I wonít be surprised if they post an EPS of close to about 28-30 for FY11 because their first phase has already gone into production and second phase can start also contributing from the January to March quarter.
In spite of all these things, because the issue got undersubscribed, there maybe some element of the market momentum which we see happening in all these stocks which have been very bad.
Yesterday, we saw the stock moving to about Rs 390. I donít think that is the right value. The stock does not deserve a valuation of more than Rs 300 per share. Yes, on the long-term horizon it has a good potential to move up but at the current price, it is definitely driven by the momentum.
Q: What did you make of Gyscoal Alloys and the way it listed yesterday?
A: It is very unfortunate because if you see this is a very small stock. They are a small mini steel plant making structural CTD bars etc and the stock can very well get compared with Gallantt Ispat . When they went public, you did not see any response in the QIB category and all the grey market was quite active. So this is one more issue which you have seen on the lines of Gallantt Ispat.
I donít think these prices can really sustain even if you take an expected EPS of close to about Rs 12 or maybe Rs 15. Generally, these kinds of stocks are ruling at a PE Multiple of 4 to 5, so the stock does not deserve to get a valuation of more than Rs 50. Whatever we have been seeing now is maybe the market operation element in the price.
Q: NTPC has been under pressure for a while now. Yesterdayís trade was the highest drop that the stock has seen in many months. Do you expect some more of a downside on NTPC?
A: I donít think that because there has been a positive bias having built up ahead of the Coal India IPO. Whatever positions we generally see, have been created in the F&O and gets liquidated. Maybe the stock doesnít move continuously beyond a point. I donít think from hereon we expect much weakness in NTPC.
Q: What about Prestige Estates ? Do you see it holding above its issue price?
A: On a fundamental basis, I donít think the stock deserves a valuation of Rs 150.
But yes, the kind of subscription which we have seen from the HNIís and retail category where retail got subscribed just 10%, HNI by about 25% of the allocation, I was expecting a great momentum or maybe the operator play in the stock has not happened.
Q: Do you keep an eye on Digjam in the textile space?
A: Yes, there has been this all kind of land revival and post restructuring package but this seems to be more of a trading play. We have seen a couple of months back, good trading interests having taken place.
The stock moved close to about Rs 18-20 and then again corrected to about Rs 12-14 levels. Considering the management strength, the product profile and the kind of mess the company has faced in the last three-four years, my view is negative on the stock.
Q: Raymondís management yesterday spoke about the Thane land development, where they seemed non-committal. The stock has run up in expectation. What would you do with it now?
A: The trigger for the stock is that the settlement has happened with the labourers. That was the bone of contention that was coming in their way. They wonít be presenting any rosy picture at this point of time; they have to make the first payment installment because the matter is now pending before the state government, so obviously they are also keeping a watch.
Once they have the labour issues settled which is likely to happen in the next three-four months by making both the installments which are owed to the workers. Only then they will be taking up the development of about 20 acres of land as the land which they have been holding is about Rs 150-160 acres. The market expecting all this has been taking a positive call on the stock, which in my view is right.
A: Both have been quite bad. I was more upset looking at the results of Gujarat Alkalieís numbers because I donít think for any other Chlor-Alkali manufacturers we have seen that kind of fall if compared with the next comparable peers which is Aditya Birla Chemicals.
In fact, they have shown a flat performance in their first quarter. This kind of margin pressure was not seen for the caustic soda makers. The same goes for Union Bank. When you have been seeing good results coming in from all the PSU banks, this has been a real disappointment.
Q: How would you approach Arvind on the day of its numbers? What are you expecting?
A: It is likely to post good profits and apart from that, the company is doing very well because of better realization of denim. I donít think they have been seeing much pressure as of now on the cotton front.
They have chalked out plans of moving into retail which will probably increase their valuation and perception because of the amount they will be monetizing from their surplus land, which will get channelized for expanding all this business. There has been largely a change in outlook, mainly because of positive views on the sector and because of companies having initiated all these plans.
Tags: market, nifty, sensex, SP Tulsian, BS TransComm, Gyscoal Alloys, Gallantt Ispat, CTD bars, NTPC, Coal India IPO, F&O, Prestige Estates, HNI, retail category, Digjam, textile space, Raymondís, Thane land development, Union Bank, Gujarat Alkalies, Chlor-Alkali manufacturers, Aditya Birla Chemicals, caustic soda, Arvind, denim, cotton
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