Dec 29, 2012, 04.33 PM | Source: CNBC-TV18
In an interview to CNBC-TV18, SP Tulsian of sptulsian.com gives his expectations from the market in January.
SP Tulsian (more)
CEO, sptulsian.com | Capital Expertise: Equity - Fundamental ,IPO
Below is the edited transcript of Tulsian's interview to CNBC-TV18.
Q: There is quite a bit of news flow that is expected this weekend regarding the fiscal cliff, but putting that aside and the trigger that we have in terms of domestic cues, the policy in January and the earnings season. What’s the general view on how the January series may pan out?
A: I am keeping my positive view on all the events, the Q3 numbers are expected to be better and the policy initiative in the form of the government moves, which we have seen in the form of the staggered price increase. Atleast the positive intentions for the economy have been expressed by the prime minister.
I have my apprehension on how far it will be feasible and implemented, but atleast these things will act as feel-good factors in the first half of January series. That is a reason I am keeping my positive stance and expecting the Nifty to hit a level of 6,100-6,150 by middle of January. Remember, this is the elongated series of five weeks. So, one has to be very cautious and keep the positive stance for the first half of the series.
Q: Are there any mid-cap ideas that give you further conviction where you would like to plough in your money right now?
A: There are many ideas. I expect activity to be centered around these mid-cap stocks only for whole of 2013. I am not saying that the run-up on the indices will not be seen, but the out-performance will come more from the mid-cap ideas. My first choice of stock would be Radico Khaitan, largely on the consumption story.
I had earlier given the buying call on United Spirits at Rs 450. We saw that increasing by 300 percent in one year. So, Radico Khaitan, again is a consumption story and a very good player in the brewery space. If you see its Earnings Per Share (EPS) of about Rs 7 for FY13, it is expected to increase to about Rs 9 for FY14. It looks like a very good story to me.
The other stock that I am recommending is Suzlon. Its corporate debt restructuring (CDR) proposal is likely to get implemented by the banks, largely led by the State Bank of India. SBI, has been keeping a very positive stance on the company. If you see their overseas subsidiary , REpower, the 100 percent subsidiary, it is valued at about USD 3 billion or so. Once the debt restructuring by the CDR cell happens, it will be seen quite positively by the market.
The last stock I find worth recommending is the SKS Micro. The management indicated that they are going to see the bottom-line in black for Q3 and we are expecting to see the Q3 numbers by the end of January. So, I have a positive stance on SKS Micro. The stock is likely to move about 30 percent from hereon in the next three to four months.
Q: This week was heavy in terms of Initial Public Offerings (IPOs), but among all the three, which one do you think has the most lucrative potential?
A: I am keeping my positive stance on Credit Analysis and Research Ltd ( CARE Ratings ). If you see the margin, the company is enjoying a margin of 53-54 percent and if you go by the comparative valuation with the other two listed players, Crisil and ICRA , the company is ruling at a Price-Earnings (PE) multiple of maybe 21-22 based on FY14 earnings, while the other two peers are ruling at a PE multiple of 31-32.
So definitely, there are all the chances of PE expansion and considering the better margin of the company, which they are enjoying, I am quite hopeful. I am expecting that share can move to about 1,150 or so in the next eight to 10 months. So, those who want to have a sound stock in their portfolio need to go and choose for CARE Ratings. I am not keeping my positive stance on the other two listings; PC Jeweller and Bharti Infratel .