Positive on Havells, S Kumar: Tulsian

He also says that the overall infrastructure and real estate segments will really give huge pain and that is what we have seen happening in the results of Lanco , Suzlon , GMR Infra . So, the pain is likely to continue maybe for the whole of FY13.

Below is the edited transcript of his interview. Also watch the accompanying video.

Q: Havells is down 6% but the numbers have been quite good. It’s just a sell on news sort of situation now?

A: There is no complaint in the domestic operations. They have not given separate numbers on the consolidated basis for the quarter. Europe has not been very exciting for them. The share is ruling at a PE multiple of close to 18-19 times in FY12. It is difficult to see the multiple what we are currently seeing right now.

Trading interest and informed buying is creating a lot of volatility. In last on month the share has moved from Rs 500 to Rs 600. I think at this level the profit booking have started coming in. Though the results are not bad, but they are not exciting either.

One can buy this stock in the range of Rs 530-535 from both trading and fundamental point of view. One can expect the stock to move back at Rs 580 in a month’s time.   

If somebody initiates a buy at the current level one should remain prepared with a positional view. I do not think that there is any point, nobody can catch the bottom. But yes, it qualifies a good trading or maybe a short-term buying stock at about Rs 530-535.

Q: Do you think that there will be more pain for companies like Reliance Communication , Kingfisher Airline and Shree Renuka who are finding it tougher and tougher to fix their books?

A: We have been expecting deleverage in some of the stocks which you have mentioned. Stocks like DLF , GVK , GMR Infra can be added to the list. Debts of all these companies have increased about 12-15%.

When you are not seeing interest softening and the expectations from all were that they will definitely reduce their debt, maybe some indications have come. HDIL have reduced their debt by Rs 200-300 crore in spite of not selling any TDR.

But I don’t think that overall infrastructure and real estate segments will really give huge pain and that is what we have seen happening in the results of Lanco, Suzlon, GMR Infra. So, the pain is likely to continue maybe for the whole of FY13.

Q: Your initial thoughts. This is the only data that we have for now, but what would your reaction be?

A: Results of all three upstream companies who are sharing the subsidy burden are not rational and have gone for a toss. I don’t think GAIL will be provided more than 7% of the Rs 18,100 crore subsidy which is collectively provided by all three OMCs in this quarter.

I am not expecting any negative surprises to come on that account. There could be some exceptional items because nowadays we are seeing lot of exceptionals and maybe the tax write backs and all that which distort the bottom-line. I am not expecting the subsidy sharing provisions to vitiate this number so badly.

Q: What is your view on S Kumars and any expectations from the numbers?

A: The reason for the upward movement of this stock can be attributed to the news of debt recast by the bank of Rs 35,000 crore. The bottom line is quite linear at Rs 3.30-3.50 EPS every quarter on an annualized basis. S Kumar has posted an EPS of Rs 13-14 in last three quarters, which is likely t get maintained. I don’t think that there will be any negative or positive surprise as well.

Debt has always remained a big concern for the stock, but I hold a positive view on this stock. Textile and debt recast news are positives for this stock.