Q1 GDP at 5.6%; Bullish on Sesa Sterlite: Tulsian

Tulsian is very bullish on Sesa Sterlite, the merged entity from the Vedanta Group as it combines a huge array of the businesses such as crude, iron ore, zinc, copper and aluminum under one roof which makes the company a formidable presence in the industry.

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

Q: What have you made of the results posted by Tata Motors ?

A: I don't think that there is any disappointment. If you analyse the performance of the margins and JLR and add the forex losses of Rs 440 crore, I don't think there is any room for disappointment.

But the kind of run-up in the last couple of weeks due to the results may not provide a fresh trigger for the stock to move beyond the current levels and profit-booking may come in.

An observation of the overall trend of the market indicates a shift in preference in the automobile sector towards Mahindra & Mahindra which announced results on Wednesday.

So, profit-booking may probably continue and the stock may slide back to Rs 220-225 where renewed buying will step in. So, in technical terms some weakness will come into the stock, but I don't think that there is any complaint from the results which will not act as a trigger for the stock to move beyond the current levels.

Q: Are you worried about SBI 's asset quality?

A: I was not expecting this kind of weakness from the results. But if you see today, maybe after one o'clock, the kind of correction in the stock price probably indicates a sense of caution or expectation of negative surprises from the bank’s results. If there is anything that could throw up a negative surprise, it has to be asset quality.

So taking cues from the behaviour of the share price, especially after after one o'clock, there is an increased sense of caution. But yes, it is essential to keep a watch on the results, which may offer some negative surprises.

Q: Pantaloon management has accepted the slowdown in the business and has estimated that it could continue for a while. Would you be circumspect about the stock now?

A: The caution or maybe the pessimism remains on the stock as the June quarter is a lean season for the retail segment. The recovery may start from September because of the festive season. But this candid confession was very much expected from the management due to the lull and discount prevailing in the retail segment.

There are no expectations of any improvement in the margins or in the performance of the core operations and now the entire focus is on measures that will be initiated to reduce thee debt.

The interest burden in this quarter has risen by about Rs 30-35 crore on a sequential-basis has dampened the results with a flat bottom-line, if exceptional income of about Rs 260 crore is excluded. So, obviously the sense of caution will continue to remain on the stock until there is fresh monetisation of assets and properties held by the company which will result in reduction of debt.