Expert take: SP Tulsian's view on railway, sugar stocks

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Expert take: SP Tulsian's view on railway, sugar stocks

In an interview with CNBC-TV18, SP Tulsian, sptulsian.com, speaks about railway and sugar stocks.

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Excerpts from Bazaar 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 Titagarh Wagons BSE | NSE 30/05/12 Are Mutual Funds betting on Titagarh Wagons? Other Stocks in this news Stone India | Kernex Microsystems (India) | Texmaco Infrastructure & Holdings | Kalindee Rail Nirman (Engineers) | Aurobindo Pharma | Shree Renuka Sugars | Balrampur Chini Mills | Bajaj Hindusthan | Triveni Engineering and Industries |

In an interview with CNBC-TV18, SP Tulsian, sptulsian.com, speaks about railway and sugar stocks.

Below is a verbatim transcript of his exclusive interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: Today is the railway budget. This time railway stocks haven't done well in the run up to the event. Do you expect any major movement in any of these rail stocks?

A: If you see the valuations of all the stocks whether you talk of Titagarh Wagons , Stone India or Kernex Microsystems India , they have corrected way beyond their fundamentals, even if I don't factor in the expectation. There is general weakness as we have seen in case of midcap stock, so that could be the large reason for correction of all these stocks.

But I think there should not be much disappointment because capex cannot really be kept on hold by the railways also. If you see the case of Titagarh Wagon and Texmaco , they are largely into the railway wagon manufacturing and the demand for railway is consistently on the rise. Last year, they had given a target of 20,000 wagons. I don't think there should be any reduction.

Only in case of Kernex there is problem of anti-collision device orders, which have not been coming through for the last three years, because that is what has been the expectation. Without that, the company cannot really take off because that is the only business of the company.

So, if one needs to take a stock specific call, I think purely on a fundamental basis and even if I go by railway budget expectations, there should be some order flow. But, yes, because nervousness is more, weakness is more, sentiments are dull, and so we see volatility more in these stocks. Kalindee Rail has always remained a highly volatile stock with a swing shown of as 30-35% in a month's time. Taking overall view on these stocks, on a pure fundamental basis they seem to have reached their fair valuations.

Q: Do you track Aurobindo Pharma , a huge cut for that stock, now down 26% in the last three days?

A: I am not tracking the stock very closely. I think it has got a support at around Rs 170. Cephalosporin Unit 4, some disappointment coming in and the consequential drop in the top-line and bottom-line, that has resulted in share to fall. Generally, we see knee-jerk reaction happening in case of these kind of stocks, but they bounce back equally fast because the overall fundamentals of the company are in place.

I don't think that you see further downside from here, maybe Rs 165 could be taken as support or where the fundamentals lie. And then it should be able to show a good bounce back to about Rs 185 to 190 in next week to ten days.