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Aug 08, 2012, 10.29 PM IST
SP Tulsian of sptulsian.com explains to CNBC-TV18 that most of the reports submitted by investment bankers or global broking houses are not credible and advises investors to bet on Jet, SKS Micro and Apollo Tyres.
Stock analyst SP Tulsian of sptulsian.com explains to CNBC-TV18 that most of the reports submitted by investment bankers or global broking houses are not credible as they state conclusions that are sensational and are bereft of any in-depth analysis.
Tulsian advises investors to bet on Jet which has posted very good results and is poised to reap rich rewards on the clearance of the FDI in aviation. SKS Micro comes second on the analyst's radar on positive announcements from the company. Apollo Tyres ends the list on hopes that it will follow suit on the entire tyre sector posting good results.
Below is an edited transcript of the analysis on CNBC-TV18.
Q: Would you book profits if you had shares of MMTC (Metals and Minerals Trading Corporation of India) and the Dredging Corporation of India Limited ? Do you expect the divestment to be implemented and perhaps continue to be long on both stocks?
A: I will go for profit-booking in both stocks. The market cap of MMTC is at Rs 75,000 crore. The company had an EPS of about 30 paisa for FY12, so one can conclude that the current rate of the PE multiple is ruling at 3,200 times.
The price of the stock is positive largely due to 15-20 bps floating stock in the market with 99.6% held by the government. Even if the government reduces its stake to 90%, a realistic realisation could be more than Rs 200 - Rs 250 per share. But because of this very low float and a strong trading grip, the share has moved up.
Traders one can look at a price of Rs 845-Rs 850, but this is not the stock for short-term investors or those who want to take a call on their investment.
Similar is the case with Dredging Corporation. Though there is an absence of any inflationary element in the share price, the company's financial performance is not impressive. So whenever there is a surge in prices of shares of this kind, it should be used to book profits by investors.
Q: What do you make of the Veritas report on the entire Indiabulls Group after today's fall in most of stocks from the real estate, financial services and power sectors? How do you expect these stocks to move?
A: I do not want to name the reports released by investment bankers or global broking houses. I find these reports to be too sensational. In the last four-to-five years, the Indiabulls Group has issued preferential allotments initiated restructuring and shut down businesses.
These processes are bound cause the goodwill on consolidation or the net worth of one company to merge with the resultant company or maybe with the restructured company. The points raised by the Veritas reports are aimed at sensationalisation and are not credible.
Q: What do you think about Bharti-Airtel 's results and how much lower will the stock fall?
A: The results have been worse than expected due to the announcement of the base price of the 2G auction. This negative financial performance, I think, will cause the rating of the entire sector to fall further. If the results were not so bad then it would have seemed that the effect of 2G auction reserve price was not too debilitating. But with the rising pressure of interest costs and the pressure on margins, the results have been definitely much poorer than expected.
Tags: SP Tulsian , sptulsian.com , reports, Jet , FDI in aviation, SKS Micro, Apollo Tyres, tyre sector
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