L&T, Sintex & IVRCL are good buys: Tulsian

Q: What about Bombay Dyeing? It has reacted quite violently to claims that a certain percentage of Bombay Realty was to be shared?

A: It's quite negative a for the stock. If you see, the total valuation of the stock is being derived from the real estate held - 45 acres in Lower Parel and about 48 acres in Naigaon, Wadala and one-third of that is 16 acres.

So in fact, we are talking of 65,000 sqmts which is not in respect to both pieces of the land they own.

If the same is applies for their Lower Parel property also, that will knock off a further 60,000 sqmts and that’s a very big chunk.

Overall, we are talking of about maybe 1.5 million sqft of the saleable area going away from the company and this is going to be seen very negative.

The profitability for the company comes totally from real estate. The DMT and the textile division have been making losses for last eight quarters or so. So definitely, it is a negative for the stock. I won’t be surprised to see it settling at around Rs 350 or so.

Q: Of the disappointments today between IVRCL, Orchid and Adani Power, which one would you be most disappointed with where you would rule out any near-term pullback?

A: I am disappointed with all three, except for maybe IVRCL. As I said earlier that the company’s actions are in a way providing some hope.

Regarding Orchid Chemical, honestly I will not be relying on the guidance on growth of about 15-20%.

For FY12, we heard the same kind of guidance by the management and there was an erosion of 40% in the bottom-line based on effective EPS.

Thirdly, Adani Power suffers from the pain of fuel costs. I am not going by the mark-to-market gains on the derivatives in this quarter, but the higher tax burden on account of the deferred tax may have also had its effect.The fuel costs have further aggravated on a sequential basis.

I am disappointed on all three, but if you need to take a call, probably IVRCL could be the only pick on hopes of corporate initiative. Investors can maybe look at a lower level of Rs 80-82.

Q: On the disappointing infrastructure results. Apart from the stocks previously discussed, a slew of other companies, such as GVK and Sintex, reported bad results.

Is there anything that you would want to buy at these distressed valuations or would you leave the infrastructure alone for at least a couple of quarters till there is more clarity on earnings?

A: I am not that disappointed with the results of Sintex Industries.

If I need to pick and choose amongst GVK, GMR , IVRCL and the rest, probably Sintex Industries interests me at the current levels.

I don’t think that one can really take a trading call, but on a fundamental basis, even with a short-time horizon of about couple of months, offers reasonably good returns of 10-15%.

Though it has been taking a beating on long liquidations, the results are not as bad as they seem to be.