Tulsian's top picks HDFC, Suzlon, Pantaloon, Renuka Sugar

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SP Tulsian of sptulsian.com in an interview to CNBC-TV18 gave reading and outlook for stocks across various sectors.

From the sugar space, Tulsian has positive view on Renuka Sugar and Balrampur Chini . In the retail space, he is likes Pantaloon and Shoppers Stop .

"Amongst the front liners, two stocks on which I will be putting my fingers on would be HDFC and HDFC Bank . If one needs to take a call on midcaps or smaller ones then others could be Exide Industries , JP Associates and Suzlon . These are few ideas where one can nibble in the next week in the new series," he added.

Below is the edited transcript of Tulsian's interview with CNBC-TV18. Also watch the accompanying video.

Q: What is your view on Parsvnath Developers ? It is on its way to become a penny stock. Despite clarifications from the management there has been no respite at all. What is the level on the stock that you would watch for?

A: With the kind of corrections seen in this stock, I do not think explanations or clarifications from management will serve the purpose. The shareholding pattern is very concentrated. Around 48-50 lakh shares are held by Religare which clearly indicates that those are pledged shares on which finance has been availed.

Similarly, 30-35 individuals are holding close to 50-52 lakh shares which indicate that shares were held by close group. I have heard Pradeep Jain saying that he has bought 30 lakh shares. This is not a valuation call nor is this buying is to increase his holdings.

This is give an exit to those kind of investors. In spite of all this, I will out it as this way that there is a pressure of about 1 to 1.5 crore pledged shares. Promoters have been able to find the way out only for 30 lakh shares and pain in the system remains of over 75 lakh shares. They need to give an exit to those investors.

Even on fundamental basis, if I take a valuation call of market cap of 1,500 crore and loan of about 1,500 crore, I do not think it justifies valuation of 3,000 crore when compared with Unitech or other players operating in the NCR region like JP Infra or DLF or Anant Raj Industries. This is because the company has been losing on many of its properties. It is learnt that many of their properties have been either given up sold at distress valuations.

Sometimes, there are concerns on the corporate governance whether deals are transparent or not when the land itself is getting sold. A big damage is likely to happen. The sole region revolving around this carnages is ultimately pledged shares. Pain still remains to the extent of about 75 lakhs to one crore share in the system.

Q: What is going on with some of these stocks which are going fast on their way to becoming penny stocks? Gujarat NRE Coke is now at Rs 17 and Firstsource which has become a Rs 7 stock now, what has happened in all of these names?

A: All these stocks are victims of their own actions. As far as Gujarat NRE Coke is concerned, market now seems have become tired because when there is shortage in the supply of coal and coke, in that scenario also this company is not able to make profits or post significant results. We have been hearing that their Australian subsidiary has huge value.

I don't think market likes the performance and results of the company. I don't think that there is any sign of any improvement. The explanations which we hear from the management about credit and debit notes given to customers for the previous quarter is definitely not a good sign for any investors to take a call on these kinds of stocks.

Similar is the case with Firstsource, we have seen change in guard about 18 months back we saw  the CEO moving out, since then it has been lingering on. In fact there is no stake sale. Earlier there was lot of enthusiasm that ICICI will be selling the stock.

But post Ananda Mukerji leaving the company it has been just lingering on and there is no direction. Their results look so pale and flat, one won't put any heart to analyse those results. So, there is no point in taking a call that is the only explanation I could give for both the stocks to go out of focus.

Q: What about IFCI? It was 14% up is it just short covering or any fundamental reason you can think of?

A: Looking at the up move in both India Info and IFCI indicates that both the companies are very aggressive in recovering pledge shares financing. That must have given positive indications. Even for India Info, I don't know how much amount has been allocated for this investment but one should see the total amount of Rs 5,500 crore as finance and investments. So, a big chunk of that must have been given against pledge shares also.

So, both these things indicates that promoters or financiers or whoever has availed the finance are getting those pledged released and funds are getting released. That could just be one reason for both the stocks to move up. We also need to check the share price of Edelweiss Capital, Religare who have big exposure against such funding. So, this has more to do with the recovery process getting accelerated at the NBFC level.

Q: The list of many midcaps that have lost about 30-40% this series, anything that caught your attention as a buy call at this point for the medium-term?

A: I will be a bit selective. In the front liners, two stocks on which I will be putting my fingers on would be HDFC and HDFC Bank. If one needs to take a call on midcap or smaller ones then others could be Exide Industries, JP Associates and Suzlon. These are few ideas where one can nibble in the next week in the new series.

Q: Anything in the sugar names that you would like to pick up after the big cut?

A: The quarter 4 results of Bajaj Hindustan have been very disappointing .Though they have not presented standalone results but that have posted a net loss of abut Rs 100 crore. I continue to have negative view on Bajaj Hindustan. But I have a positive view on Renuka Sugar and Balrampur Chini. This is because I expect global sugar prices to take a upturn.

I am also keeping an eye on UP mills also as they have moved a petition. As per the Supreme Court judgement relief has been given in respect to the SAP of 07-08. Now the mill owners have started talking that court may consider Supreme Court's judgement. and may give directions to the state government to work out prices on that line.

They are also speculating a price of about Rs 200 against Rs 240 announced by the state government. So, if that happens it can give a big booster to UP sugar mills. But one has to wait till the hearing in the Allahabad High Court takes place for petitions filed by sugar mills.

Q: There is some hope on the FDI in retail coming through and a lot of these stocks have moved up quite a bit. The likes of Pantaloon have told us that they have been in discussion with global retailers as well. From this entire pocket which stocks do you like particularly?

A: I will put my hands on two stocks- Pantaloon and Shoppers Stop. Considering debt positions at promoter's level in Shoppers Stop, the promoters are bound to liquidate their stake in the company to retire debt. It is very risky when one sees stocks like Couttons, Vishal Retail , Indiabulls Wholesale Company, Welspun Wholsale Services or Provogue start moving up.

That's a very dangerous thing. Retail investors take a lot of interest in these small value stocks. They are bound to get trapped in these. I have positive view on only two stocks, Pantaloon and Shoppers Stop. I won't be putting my positive view on the third stock in the retail space - Trent . It is a very illiquid and is showing lot of volatility.