Tulsian Picks: Watch out for Titan, MSO stocks

In his analysis of the day's market, Tulsian remains positive on Titan and is especially gung-ho on MSO stocks Hathway and DEN Networks which are to greatly benefit from the digitisation of the cable-TV sector.

The market analyst also says that though it was not expected the Delhi High Court would provide full relief at the IGL hearing tomorrow, the market would take a positive view even if the case was stayed.

He refuses to take a call on Marico but was unable to understand the wisdom of the government in initiating a divestment in NALCO . 

Below is an edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.

Q: Pantaloon DVR has made a big move while Pantaloon itself is down about 2.5%...

A: Though the discount is shrinking between both shares, I don't think that there is any logic. If you are taking a positive view on Pantaloon, then it is only right to go for DVR or take a positive view.

The shrinking in discount occurred a month ago in the case of Jain Irrigation now we are seeing that happening with Pantaloon despite the demerger deal and transfer of the format business stores of the company to Aditya Birla Nuvo. So I maintain my negative view on Pantaloon.

If you see the whole structuring of the deal, there is little hope for relief. Going by the company's first -half performance for first six months on a topline of Rs 6,400 crore, there is practically no bottomline. The PAT was at just Rs 7 crore.

So it's difficult to take a call on how much loss can be reduced in this format of business with an expected annual turnover of Rs 1,700 crore.

Apart from this, the amount debt of only Rs 800 crore and not Rs 1,600 crore has been transferred. In fact, Rs 800 crore of fresh debentures which will be raised by Pantaloon Retail will also be transferred to the demerged entity.

In the case of a demerger, the shares of the new entity will come after a gap of about two-three months. There have been many cases where the demerger has ultimately resulted, on a net basis, in losses to the old shareholders.

So I won't be taking a positive call on Pantaloon or on the DVR as well.

Q: Titan has performed well with an upside of 5%-5.5%. Do you think the management's guidance of a topline and bottomline growth of 30% is achievable? How do you approach the stock?

A: I presume that it is achievable. I don't doubt the projections given by the company. But if you really see the prices the share has been ruling at, it was at a level expected by the market.

This rate of growth could be expected for next two-three years and not only for FY13.

The price behaviour of the stock indicates the absence of any negative for the stock for the next three months or so.

It is likely to be in the range of Rs 225-250 though the stock is up today by about 5%. But the profit booking at higher levels will again see the stock correcting to fall as low as Rs 230-235.

So I expect this stock to moving in a broad range of about Rs 225-250. Because there is no disappointment, there is no great excitement on the guidance given by the management.