Apr 02, 2012, 08.08 PM | Source: CNBC-TV18

Hold Kingfisher, bet on IVRCL & avoid Auro Pharma: Tulsian

SP Tulsian of sptulsian.com, is optimistic on power stocks with the Tamil Nadu government’s move to resolve the power crisis. He advises caution to investors on Aurobindo Pharma and is gung ho on IVRCL and Kingfisher Airlines

In his analysis of the day’s market on CNBC-TV18, SP Tulsian of sptulsian.com, is optimistic on power stocks after the Tamil Nadu government said that it is working to resolve the power crisis.

He advises caution to investors on Aurobindo Pharma till the results of the CBI investigation are announced. He is gung-ho on IVRCL, despite the takeover battle, and Kingfisher Airlines, harassed by a possible pilots’ strike and funding problems.

Below is an edited transcript of his interview on CNBC-TV18, Also watch the accompanying video.

Q: What is the impact of the Tamil Nadu government’s action on solving the power crisis?

A: Overall, the news is encouraging. The state government has started taking a pragmatic view of raising power rates and bringing down loses. This bodes well for the financing companies, especially PFC , REC and PTC India .

All three companies have huge outstanding loans from the states of Tamil Nadu and Rajasthan. So, may be an upside of about 5%-6% in all three stocks can be expected as they have all have risen today.

Q: What are your thoughts on Aurobindo Pharma ?

A: The Jagan issue looks serious, but I don’t know how far it will really pan out. So, I don’t think an investment call can really be taken at this point.

But if somebody wants to play as a trader, there is no harm in creating a long position and the range of Rs 110 looks sensible as the stock usually bounces back from those levels.

Investors should stay away unless until the CBI investigation is over.

Q: How much higher will IVRCL rise after its upward move to Rs 70?

A: It all depends on the fight against the hostile takeover, which I think is going to pan out. I am holding a positive view on the stock for the simple reason that Essel Group is not going to leave half way as their expansion spree is already underway.

The group has initiated a buyback in ZEE Enterprise and the fund allocations must have made for increasing the stake in IVRCL as well. Essel Group also plans to buy Dainik Jagran and all that.

Overall, an ambitious expansion plan has been chalked out. I won’t be surprised to see the share moving to Rs 90-100 in next one month depending on the results of the takeover battle.

Q: Where do you see Kingfisher head from here? The pilots may go on strike tomorrow and the stock is down 9%?

A: I maintain my view that Vijay Mallya will have to set right Kingfisher. He has little access to other assets which are pledged largely on United Breweries and United Spirits to the banks.

So, he has to find out some solution. He cannot escape from all these liabilities and any headway made in turning the airlines around will see the share price moving back to about Rs 18-20.

My call is that those who are holding positions should cling on while brave traders can enter at current levels.

Q: Do you think the oil price hike will come through?

A: I have been expecting a price increase in petrol, but I don’t think anything can really be expected for diesel and LPG. The hike in petrol should be anywhere between Rs 3-5 per litre.


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