SP Tulsian positive on PTC, PFC, REC for long-term

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SP Tulsian positive on PTC, PFC, REC for long-term

Talking about the realty stock Ansal Housing, SP Tulsian of sptulsian.com said that the long-term looks positive for the stock. Moreover, he holds a positive view on PTC, PFC and REC with a long-term view.

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Excerpts from Closing Bell on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Ansal Housing BSE | NSE 29/05/12 Are Mutual Funds betting on Ansal Housing? Other Stocks in this news PTC India | Power Finance Corporation | Rural Electrification Corporation | Everonn Education | Educomp Solutions | Edserv Softsystems | Reliance Capital | Reliance Communications | Reliance Infrastructure | Reliance Power |

Talking about the realty stock Ansal Housing , SP Tulsian of sptulsian.com said that the long-term looks positive for the stock. Moreover, he holds a positive view on PTC , Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) with a long-term view.

From the education pack, While Educomp can move to about Rs 245-250 levels, Tulsian feels Everonn doesn't have the potential to move beyond Rs 380-385 levels. He also indicated that Edserv won't have much comfort going forward. "Edserv has reached its full valuation and will be risky to double or nibble in that stock from hereon," he added.

Here is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video.

Q: How would you approach Ansal Housing?

A: The promoter's find all the real estate stocks quite cheap. They always say that their stocks are ruling at 25-30% of the current NAV, but market is not looking at these stocks from an NAV angle. The market looks at these stocks from the profitability or off take in the real estate sector.

Ansal Housing has a huge debt and a debt of close to about Rs 1,500 crore with a very low market cap of about Rs 300-400 crore. But, if we take a call on the profitability or the return on the capital employed, things look quite scary.

The NCR region seemed to be quite insulated from this slowdown a couple of months back may be because of the F1 race. At that time, a lot of interest seen, but that enthusiasm seemed to have tapered off. In fact, the situation is very poor.

It is difficult to understand whether the share buyback move initiated by Ansal Housing management, which has huge debts, was justified. Sometimes, it is felt that this could be an exercise to shore-up the market price. Now, whatever the board authorises to buyback, SEBI smartly has put a condition that 25% of that must be bought from the market.

All these things look positive in the longer term. It is good if the management can take a judicious view of share buyback and shore-up the book value or earnings. But, it must justify the judicious financial planning and financial move in this direction.

Q: Would you play some of the stocks like PFC, REC and PTC. There is a big run on them. Would you pick up any of these stocks with a trading perspective?

A: I hold a positive view on PFC and REC because they are in the process of consolidation or may be bottoming out. The problem with these stocks is that whenever they start correcting by about 3 to 4% on any negative news form the State Electricity Boards, these stocks also correct.

There is no comfort and confidence on part of the investors. PFC and REC don't qualify as the stocks for short-term. They would be very good with a view of about one year or so. If one gets a gain of 10-15% in may be a couple of months, one can exit. I hold a positive view on PTC.

Q: From the midcap bunch, a couple of education stocks like Educomp and Everonn Education had a good run this week. Both these stocks are up about 15-16%. Do you expect more upside further?

A: Both the up moves are event based. Everonn will now make an open offer at Rs 528, which was delayed by about 15 days. Considering that the company has a 45-lakh shares open offer with acceptance ratio expected to be at about 45%, the share has a leg to move up to Rs 380-385. It doesn't have the potential to move beyond that.

Educomp has been showing a huge trading range. In the past, it corrected from Rs 280, fell to as low as Rs 200 and again moved to those levels. This is happening for the second or third time in the last three months. It can move to about Rs 245-250.

Edserv has been hitting the upper circuit for the last one week or so. It has come out of the margin call problem, which we have seen in the week prior to that. I won't have much comfort on Edserv going from hereon. It looks like it has reached its full valuation and will be risky to double or nibble in that stock from hereon.

Q: What did you make of the run on ADAG stocks? Is it a technical short covering move or is there some more steam because of how much they have corrected and underperformed?

A: The problem with all the ADAG stocks is that they are looking very tired. Despite Monday, yesterday and today's up move, these stocks have not participated. Reliance Capital has beaten a lot in last couple of months since they announced their Q1 results. Since then, in the last three to four months, it has corrected so much that it has had an up move of may be about 3-4%. Even today, it saw a technical up move along with names like Reliance Comm and Reliance Infra .

Reliance Power has been languishing in the range of Rs 80-90 levels. If we look at the overall market cap valuations of the group, it is finding difficult to pierce beyond Rs 60,000 crore. It has been hovering between Rs 55,000-60,000 crore till yesterday. Whenever an up move is seen, it immediately gets corrected in the near-term or the gain gets wiped off very quickly.