Jan 22, 2013, 10.28 PM | Source: CNBC-TV18
SP Tulsian of sptulsian.com does not see the divestment of Oil India with floor price to be any problem. He said in an interview to CNBC-TV18.
SP Tulsian (more)
CEO, sptulsian.com | Capital Expertise: Equity - Fundamental ,IPO
"Oil India can get corrected from Rs 560 to Rs 540-545. In that case government will try to play safe. The floor price might be fixed at Rs 520-525", he added.
Below is the edited transcript of his interview to CNBC-TV18
Q: We need a comment from you before we get more details on Dish TV and the stock impact that we are seeing right now?
A: Disappointment on face of it. As last time a forex gain reversal of Rs 76 crore in the Q2, which they reverse giving effect from 1st April 2011, in which the forex losses were not booked into the profit and loss (P&L).
So, logically if one knocks that off, Q2 had a loss of about Rs 21 crore. The earnings before interest, tax, depreciation, and amortisation (EBITDA) is very crucial. I was estimating it to be at about Rs 165 crore.
We need to watch for the EBITDA. Also if there are any exceptional to this net loss of about Rs 45 crore. Considering the revenue I don’t think that there is any kind of disappointment. However, looking to the net loss, definitely they are negative.
Q: The EBITDA for Dish TV has come in at around Rs 138 crore. So that would result in a margin picture of around 25 percent vis-à-vis 28 percent, which they had last time. The average revenue per user (ARPU) has come in at around Rs 160 compares to Rs 159 on a sequential basis.
A: Yes, in fact disappointment on the EBITDA only. It is down by about 27 percent. In fact I was calculating the EBITDA to be at about 29 percent, at Rs 165 crore. This is because Rs 32 crore was the interest in Q2 and now it is sub-30.
So, definitely things are good on that front. In fact EBITDA is very low at Rs 148 crore. It is down by about 27 crore on the estimated EBITDA which reconciles the higher net loss of about Rs 45 crore.
Q: It is currently at about Rs 73, where do you see the stock head from here? Where do you think the base will be build?
A: If one sees the chart or the price pattern of about three-four months, Dish TV has not breach the level of Rs 70. Once the breakup or the analysis of the result is made, probably Rs 70 is again seen to be the good support. Things will start building up with a positive bias on all the distribution stock because of digitization of the second phase.
I am not expecting the stock to correct below Rs 70. However, due to the hopes of better numbers and the way we have been seeing the local cable operators (LCO) and multi-system operator (MSO) stocks moving up lie DEN Network and Hathway Cable, people have been taking the bullish call on Dish TV. Still it is not likely to correct below Rs 70.
Q: What are your thoughts with regards to the divestment programme? Do you think Oil India and Steel Authority of India (SAIL) would successfully go through in FY13?
A: Obviously, the government has to now accelerate the process. I think most crucial for the government will be that of National Thermal Power Corporation (NTPC). The amount of about Rs 12,000-13,000 would get garnered by the government from offer for sale (OFS) of 9.5 percent in the company. However, I don’t know, nothing has really been heard of. SAIL divesting at the current valuations doesn’t look a logical move.
There shouldn’t be any kind of problem with Oil India. Not at the current rate because I expect the floor price to be anywhere between Rs 520-525. We have seen the steep corrections now started taking place in the oil marketing companies (OMCs).
Part of the profit booking has also been seen in the Oil and Natural Gas Corporation (ONGC) stocks. So, one doesn’t know when Oil India can get corrected from Rs 560 to Rs 540-545. In that case government will try to play safe. The floor price might be fixed at Rs 520-525. In that event I don’t think that selling or the divestment of Oil India with floor price should really be any problem.
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