Jul 24, 2012, 08.12 AM IST

Govt to act soon; watch out for Lupin, ING Vysya: Tulsian

SP Tulsian of sptulsian.com explains to CNBC-TV18 that the government has two-to-three weeks to announce decisions on issues like the increase in diesel and LPG prices followed by FDI in retail and aviation. Of the stocks that will announce results on Tuesday, Lupin and ING Vysya Bank are the most promising.

SP Tulsian, CEO ,sptulsian.com

Expertise : Equity - Fundamental ,IPO

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Market analyst SP Tulsian of sptulsian.com explains, in his analysis of the day's stock on CNBC-TV18, that the government has two-to-three weeks to announce decisions on issues like the increase in diesel and LPG prices followed by FDI in retail and aviation. Of the stocks that will announce results on Tuesday, Tulsian is most keen on Lupin and ING Vysya Bank .

Below is an edited transcript of the analysis on CNBC-TV18.

Q: What is your view of L&T numbers prima facie?

A: I maintain that taking a call based on QoQ is not the correct approach. There has been a decline in L&T's topline in electronic & electricals and industrial product machinery division on QoQ basis. Both these division are showing very small contribution, their engineering and construction division is posting a top line of Rs 800-1,000 crore against Rs 10,000-crore turnover.

Both of these divisions have shown a top line of Rs 600-700 crore. The have a order flow or the order intake of Rs 20,000 crore, but I don’t think that the share can move beyond Rs 1,450, which has been a strong resistance that we have been observing for the last one month. Profit-booking will come in the moment it will touch Rs 1430-1435. One can take a range of Rs 1,350 to Rs 1450 for the next one month with very limited upside from hereon.

Q: Would you buy Crompton at Rs 119 level or do you expect more downside from here?

A: Overseas operations of the power system division have shown great disappointment. From the total topline of Rs 1800 crore, Rs 1,100 crore comes from the overseas operations which has a negative EBIT of about 1.3% or 1.4%.

There is no problem on the domestic front, where they had a record turnover of Rs 700 crore from power systems division for the quarter with the maintained EBIT margin of 9%. But the consolidated EBIT margin of 2.5% for the power system division of industrial system is extremely bad.

In 2011, when the company presented their first quarter result they said that H2 will show some improvement in the margin but that has not happened. I wont be surprise if we have the entire FY13 also seen as a washout. I am lightly positive on BHEL in this segment. However, result of Crompton is really disappointing.

Q: Geometric has made a really good move today after the announcement of results. Would you buy it now or has the stock run dry?

A: I think now profit-booking should come into the stock. Definitely, the results have been quite good. The company has posted a PAT of over Rs 20 crore against Rs 13 crore in the same quarter last year. But I think the stock has seen a good run-up. But I will take a cautious view on the stock.

Q4: How much more do you think Maruti could move before it becomes a value-buy for investors?

A: Till Friday, my outlook was that the level of Rs 1,060 could be a good entry for short-term investors or traders. But considering the current situation, where production and profitability is going to be affected, the stock could correct and the holding level could be at Rs 1,000.

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