Oct 05, 2011, 08.53 PM | Source: CNBC-TV18
In an interview with CNBC-TV18, SP Tulsian of sptulsian.com gave some multi-bagger recommendations for investors.
SP Tulsian (more)
CEO, sptulsian.com | Capital Expertise: Equity - Fundamental ,IPO
If you see the track record of Rolta , there has been caution in the stock for last 2-3 years because of accounting issues. Rolta has always been seen as a cash rich company because it did not have any equity dilution or borrowing. But the liquidity concern has been hanging on the company in last 2-3 years and that is in fact causing a lot of deterioration in the valuation of the company.
But I think todayís fall has more to do with 95% of the promoter stock getting pledged. So that indicates that probably something is not very comforting at either the promoter end or at the end of the company.
On fertilizers companies:
Reliance Industriesí decision to suspend gas supply to fertilizer plants in Uttar Pradesh is a serious issue. Aditya Birla Nuvoís Indo Gulf fertilizer has a plant in Jagdishpur; Tata Chemicals has one in Barabanki. We are already seeing big shortage in urea in the country and if for some reason this litigation goes on may be for a week, production will get affected in these seven plants at five locations. Since there is already a long queue for this gas; fertilizer users, power users, power manufacturers or power generators, it may get diverted.
I hope that these regulatory issues get resolved because this will be seen as a negative, especially for IFFCO and KRIBHCO because both are not in the listed space. Tata Chemical and Indo Gulf Fertilizer both have a good capacity of 4000 tonne per day of urea and this diversion will their production.
Apart from this, we will have far reaching implications in terms of the higher costs and so many other issues. So this needs to get resolved otherwise it is going to be an area of concern and it will hamper the overall urea production in the country.
On Jain Irrigation:
I am unable to understand this fall in Jain Irrigation . In fact I thought that this stock will probably move up to Rs 160-165 because if you see the trading pattern of the stock, this has been moving in a very wide range of Rs 130-175. In fact we saw Rs 130 levels in the August, but it has covered much of its losses and moved up to Rs 150 in the September series.
But it has started correcting again. The swift fall can probably take it to Rs 125 because that has seen to be a strong bottom. I donít honestly see any fundamental reason for any weakness in this stock, so this is a very good trading opportunity where one has to only take a trading call in a very broad range of Rs 125-170. But this is in fact very difficult because of the high volatility seen on an intraday basis.
On the sugar sector:
I think this weakness in the sugar sector is justified. As I have been saying, September quarter results are likely to be very bad for all the companies, including Renuka Sugar . Even though Renuka will have the benefits of its overseas operations which will get consolidated, the high interest rates and depreciation burden has taken a toll on its working.
If you look at the UP based sugar mills which prominently include Bajaj Hindustan and Balrampur Chini , I donít think that there will be any joy from them either. Bajaj Hindustan will be having their September ending, but the results are not likely to get declared in next two months from now. I believe the performance on the topline and bottomline will really be pathetic and the capital dilution now of 200% is adding to the woes to the share price. So overall, I have a negative view on the sugar sector.
Watch the accompanying video for full details.
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