Gati, Suzlon, CIL: Are they hits or misses for Tulsian?

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Gati, Suzlon, CIL: Are they hits or misses for Tulsian?

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com gives his analysis on select stocks like Gati, Suzlon and Coal India. He recommends whether an investor must buy into the stock or sell it.

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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 Gati BSE | NSE 30/05/12 Are Mutual Funds betting on Gati? Other Stocks in this news Suzlon Energy | Coal India | Steel Authority of India | Shree Renuka Sugars |

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com gives his analysis on select stocks like Gati , Suzlon , SAIL , Shree Renuka  and Coal India . He recommends whether an investor must buy into the stock or sell it.

Below is an edited transcript of his interview. Watch the accompanying video for more.

Q: What did you take away from the newsflow that came in from Gati and the big plummeting of the stock?

A: The kind of run-up we saw earlier was more on the stake sale news by the promoters. Now we have seen restructuring. Whenever, these kinds of restructuring takes place, recent history shows they have been wealth destructors for shareholders of the combined entity and the same thing is likely to happen though they have transferred the debt. They have only transferred the 30% investments in the shipping logistics business but still the market goes for profit booking because of the kind of run-up where the stock almost doubled in the last couple of months. So this is not very positive for the stock in the long-run.

Q: What did you make of Suzlon's numbers and the 7% fall that we saw today?

A: I am not too disturbed with the numbers because the only negative has been the guidance given by the management and that too for FY12. If you see it is the arithmetical adjustments - already three quarters are over. If you see Repower Systems, there is an increase in EBITDA by about Rs 130-140 crore but if you see this Q3 on a consolidated basis, the tax liability has increased from Rs 30 crore to Rs 130 crore that has resulted in the net losses going up.

But considering the order flow to the extent of 1,500 megawatt, especially from the domestic front as well as the overseas I think the company has a good future. The only concern remains on the domestic operations on which they have all sorts of problems.

But post acquisitions of Repower Systems, in the last week of October, that is going to help the company improve its performance but I won't take the Q3 results on a consolidated basis as negative. Probably, a lot of technical build-up has happened in the stock due to which we are seeing profit booking. The stock should take support at around Rs 25-26 again where renewed buying interest is likely to come back.

Q: On Coal India, what would you read into the fact that the topline or the revenues have come in a bit lower than expectations?

A: I am not too disturbed about that. It could be interpreted in two ways. In spite of the lower off-take, I don't think there are any concerns on the realisation front. Specially on the other income, if it is the other operating income again one has to understand the break-up or one has to see the break-up but I won't be really too disturbed with the drop in the topline.

Q: A thought on what you have heard on the SAIL numbers?

A: I am pleased with the numbers. Just take the two scenarios - Rs 975 crore is the forex losses, Rs 509 crore in Q2 and Rs 466 now. If that is going to get reversed in Q4 so overall if we take the situation, first coming on the topline there has been some reduction in the selling prices as well as during the year if you compare it on a YoY but if I compare it on a QoQ, I don't think there is any kind of disappointment.

The Rs 466 crore against Rs 33 crore gives us a straight swing of Rs 500 crore which justifies the reduction in PAT by an equivalent amount. I am satisfied with the EBITDA margin at 13.6%. The only correction which we are seeing is more because of the run-up which we have seen in the stock price in the last couple of weeks where it has gone up by Rs 20 to Rs 24. So the profit booking is bound to come in this kind of flat numbers.

Q: Shree Renuka is down 4.5%. Are you expecting bad numbers from the Brazilian operations again?

A; I am upset with no corporate development happening. When the management indicated with the September quarter results that they are looking for monetising the cogen assets or diluting some stake in their Brazilian company, they were given a time line of about two months. That has not happened. We have seen exactly 90 days lapsing since then which is more disappointing. We also had huge hopes built up of the sugar decontrol and I myself was relying on that but that can be taken as a deferral of the news of non-monetisation or maybe the stake dilution in the Brazilian subsidy.

Taking all these into account, the results are going to be flat to negative. I won't be taking them as negative as having posted by the UP based sugar mill. You have to compare the results of this company with Bannari Amman and Ugar Sugars which have their presence in Karnataka based sugar mills. Their Indian operations will be showing good results than what has been shown in their September quarter but yes, profit booking should see the share fall and the forex losses which were at Rs 500 crore plus in Q2 will again be a spoilsport in this quarter as well.