What to do with Patni, RIL, Orchid Chem now? Tulsian tells

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What to do with Patni, RIL, Orchid Chem now? Tulsian tells

SP Tulsian of sptulsian.com in an interview to CNBC-TV18 shares views on stocks across various sectors. He gave reading and outlook for Patni, Reliance Industries, Orchid and others.

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Excerpts from After the Bell on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets

SP Tulsian of sptulsian.com in an interview to CNBC-TV18 shares views on stocks across various sectors. He gave reading and outlook for Patni , Reliance Industries , Orchid and others.

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

Q: What did you make of the news on the Patni and would you advise tendering into this one?

A: This was more or less on expected line, this move was expected by December, but the management has already hinted about it. They have said that process is likely to get completed by April or middle of 2012. The disappointment is only on the floor price which I think is non-relevant.

I heard the management saying that they have allocated a certain amount which translates into a value per share of about Rs 440-445 and they may not find it interesting to acquire shares above those rates.

Phaneesh Murthy has said that he is looking for a rate southward of Rs 450 which I think is more of his wish or a strategy to influence retail investors. I don't think at those valuations shares will be acquired by them. About 81% stake of effective equity is held by promoters and 19%, and from that 19% of that about 9% is held by the FIIs.

Suppose some kind of persuasion is made with institutional investors and they are convinced about that Rs 450, which in my view is unlikely otherwise the fair price seems to be at about Rs 500. This is because the management acquired from Patni in April at Rs 504. So, there is no reason for the stock to see a value less than that.

So let's wait for the reverse book building process to get initiated will take about three months time. So, in the interim period I will advise that those who are holding the stock can exit at about Rs 430-440. I don't see stock moving beyond Rs 435-450.

Once this euphoria dies down in next week or so then the stock will languish in the range of about Rs 450 and Rs 420. When the reverse book building process starts again, interest will come back into the stock. But I am taking a call in the price to get discovered in the reverse book building close to around Rs 475.

Q: Do you think Reliance is going back all the way to those Rs 750-760 levels again?

A: Looks unlikely. Earlier my stance on the stock was that it has a range of Rs 750-850. But post their Q2 results, I won't say that Q2 results were great but we have seen a big event of company having received about Rs 25,000-26,000 crore.

If we add the cash flow of the second quarter about Rs 7,000-8,000 crore including depreciation, then the additional fund infusion of Rs 30,000-35,000 crore has taken the trading range of the stock with bottom at Rs 800 and on top of Rs 900.

The irony of this stock is that whenever we see it moving at Rs 885-890 people become very bullish without seeing any fundamental reason. This stock has the history of having a trading range of about 10%. We can't just overlook that kind of range happening in this stock.

With the kind of volatility we see, I think it will continue to have the range of Rs 800-900. Moment it touches close to about Rs 800 or Rs 5 here and there, we will see renewed buying coming in again from the informed circle or value investors. I will maintain my stance of Rs 800-900 till the middle of January when the company will be declaring their Q3 results.

Q: Did you take a look at the news on Orchid today? This stock was up 7% after Hospira announced the launch of their product which is crucial for Orchid. Do you see lot more upside on the stock?

A: I think that that is positive news for the stock but I will be taking it as a fundamental call. I have started taking a fundamental call on many stocks. We have seen huge shorts getting created in stocks like Orchid, Pantaloon and Renuka .

So I will be taking that call coupled with the pharma news having come for the stock. Because I don't think that it justifies a valuation of less than Rs 150. The share is just going down for last three or for days. So, today's rise is as a combination of both the factors.