Tulsian's views on RComm, Arvind, NTPC, Indiabulls

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Future Capital went up on a report that Kishore Biyani might sell its business to the Deccan Chronicle . SP Tulsian of sptulsian.com feels it is very likely to happen as Biyani doesn't have any other option or synergy left. However, this sale will be very bad for the Deccan Chronicle, he told CNBC-TV18. He further added that Future Capital has been a wealth destroyer.

From the textile space, Tulsian indicated that S Kumars doesn't have any reason to fall below Rs 35 levels and Arvind to move beyond Rs 110 levels and fall below Rs 80 levels. He also mentioned that Alok might move up, but it cannot be taken as a significant up move of 2-3% on a low price of Rs 18-19 levels.

Going ahead, we don't have any attraction in NTPC for six-12 months or may be a longer horizon, said Tulsian.

Here is the edited transcript of his interview to CNBC-Tv18. Also watch the accompanying video.

Q: The market seems convinced about Reliance Comm that something is brewing. What's your sense?

A: Initially, I will go with the news of leasing about 50,000 towers to Reliance Industries because RIL might require those many towers. They cannot have any other tower company, which owns so much. They will be able to strike a better deal with Reliance Comm. This could be in the pipeline and also seems feasible to take a call.

Probably, this fits in as the perfect company in the space. If we have to complement the data with their voice, probably Reliance Comm is the only takeover target remaining in the space.

Once the leasing of the 50,000 towers happens, it will increase the tenancy ratio of Reliance Comm. A couple of months back, Reliance Comm has been very confident that in a month or so, they will see the deal for sale of tower business taking place, which has not happened yet. The market is very tired with this news for the last 18 months.

In June 2010, they had a agreement with GTL, which did not materialise. Probably, the leasing of towers will happen followed by may be the stake sale of 95% that they are holding in Reliance Infratel. It can fetch them about USD 4-4.5 billion.

This ultimately leads to the debt reduction in the books of the company, which is placed at Rs 32,000 crore. So, all these sequences can only revolve around the tower business for the time being.

Q: Future Capital has gone up on a report that Kishore Biyani might look to sell their business to Deccan Chronicle. Is it likely?

A: It's very much likely because Kishore Biyani doesn't have any other option or synergy. This stock has been a wealth destroyer. This is definitely very much on the card. With the Future Group or Pantaloon Group running into a huge debt of Rs 6,000-7,000 crore, they aren't left with any other option.

It would be very prudent on Future Group's part to exit from the business. But, this will be very bad for the Deccan Chronicle. The company doesn't have any clear cut policies defined for the group. It is also learned that they are exiting from Deccan Charger and a part of that fund will get used for acquiring Future Capital.

The south based promoters might be attracted towards the lending business with the gold lending as their prime focus, but I don't know whether that would be seen as positive for Deccan Chronicle. Sale by the Future Capital will definitely be positive for the company and the group.

Q: From the textile space, what is the reason that these stocks like Arvind, Alok, S Kumars are excited today?

A: There isn't one common rule driving all of them. For S Kumars, the margin call pressure is seen getting eased off. There wasn't any justification for the share to fall to about Rs 27-28 levels even when the company posted good results. It has a leg to move up to Rs 35 levels. On a conservative and fundamental basis, considering that Reid & Taylor IPO is not happening in the next six months or so, S Kumars doesn't have any reason to fall below Rs 35 levels.

There isn't any reason for Arvind to move beyond Rs 110 levels and fall below Rs 80 levels. Sometimes we feel that the company has been getting benefitted by the fall in the cotton prices, which we have seen because of the good harvest. They are the largest consumer of cotton and are the largest manufacturer. So, that could be making the stock move in a trading range of about Rs 80-93 levels. We may not see profit booking coming back to about Rs 96 levels.

Alok might move up, but it cannot be taken as a significant up move of 2-3% on a low price of Rs 18-19 levels. Nothing is happening on account of the debt reduction, which they have hinted a couple of months back. They are looking to sell the premises, which they own in the Peninsula Centre and are likely to mobilise Rs 1,000 crore. I don't think any progress is taking place on that front. All the three stocks have their own reason to move up in this market.

Q: NTPC has not helped the Nifty at all. It's down almost 4% to Rs 169 levels. What is the reason for the stock to close so weak? Would you buy it below Rs 170 levels?

A: This stock has not performed in last one year. This stock has a lot of issues with respect to the coal block allocation and capacity additions. Earlier, we had some hopes when the tenders were finalised and given to the BGR Energy for the capacity addition at around 33,000-32,000 megawatt. There is a small up move happening at that point of time.

For the last one month or so, there has been negative perception on all the power generation company. For last one week, we have not seen any stock faring well except Adani Power, which has shown some uptake in the last one week or so.

Going ahead, we don't have any attraction in the stock for six-12 months or may be a longer horizon. I don't see any reason for the stocks to perform.

Q: The Indiabulls Real Estate are quite active today. Where do you see Indiabulls settling?

A: I expected the share to trade at about Rs 40, but it has held on. The corporate action was taken that 2.95 shares are issued for Indiabulls Infrastructure and Power, which means that those shares have a value of less than Rs 3 or 4. This kind of minor chopping off has been happening in the stock, which was a very big negative.

I don't know the reason for the stock to go down by about Rs 6 or 7 or may be about 8 or 9% because I don't think that the value justifies. If we are getting the value of less than Rs 250 or Rs 300 crore in the eventual market capitalisation, I don't know how it justifies these kinds of valuations.

I had taken a call off around Rs 40 on the share to happen, but it has held on. Sooner or later in the next couple of months, we will see this kind of erosion likely to happen in Indiabulls Real Estate.