Mar 15, 2012, 09.58 PM | Source: CNBC-TV18
According to SP Tulsian, sptulsian.com, the government will depend on the larger companies, maybe like ONGC and Coal India for its disinvestment plan in FY13.
SP Tulsian (more)
CEO, sptulsian.com | Capital Expertise: Equity - Fundamental ,IPO
According to SP Tulsian, sptulsian.com, the government will depend on the larger companies, maybe like ONGC and Coal India for its disinvestment plan in FY13. ďThey have not really talked about Coal India much. But in FY13, I think they have to seriously look for divesting maybe 5% to 10% stake further in that company to mobilise the respectable or sizeable divestment proceed,Ē he asserts.
Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying videos.
Q: Lanco is down 11% and below Rs 20 again. Would you use it as an opportunity to get in or you donít think one should be buying it?
A: I may not buy this as a trader. But definitely as an investor I will use this opportunity to enter at the current level with a view of about maybe a couple of months.
Q: There is a little bit of momentum that we are seeing in a couple of the aviation stocks. Is there anything that the market is sniffing out in terms of perhaps some positives on FDI in aviation, FDI in retail or anything like that?
A: FDI in retail or aviation, I donít think that has anything to do with the Budget. But that is the only news, which can really pull the stocks. Otherwise, there is no other reason.
Q: We were talking about a couple of gainers in trade. Is there any news on DB Realty? Why that has spiked up so much today?
A: There is no specific news. This stock has been witnessing the value buying. Sometimes you feel that on a relative basis the stock has not really moved. If you see HDIL and Indiabulls Real Estate, they have really rallied in the last 15 days or so, while the DB Realty has not really participated. So, Ajmera Realty and DB Realty are showing some upside at frequent intervals largely to catch with the rise in the other two frontline stocks.
Q: We havenít seen that much of a move this time in the smaller PSU companies, but do you expect the Budget to address disinvestment or divestment in that form with regards to the HMT or ITI at all?
A: I am expecting that, probably Finance Minster will touch upon that. If he has to show fiscal deficit anywhere below 5%, he has to mention something on disinvestment front also. So, probably a target of Rs 25,000 to 30,000 crore may get earmarked on account of that. But I donít think that he will really spell out the companies.
Apart from that, the interesting part which may emerge from the Budget is more on the residual stake sale. That can give the government about Rs 25,000 crore. They have holding in three companies. One is Hindustan Zinc , second is Balco and third is Tata Communication .
Third could be monetisation of the SUUTI assets which can give an inflow of close to about Rs 30,000 to Rs 35,000 crore. If you put together, probably he can rely on anywhere between Rs 80,000 to Rs 90,000 crore from these three things.
But specifically on HMT and ITI, I do not see any value getting derived by the government from the disinvestment point of view. Ultimately, they have to fall back on the larger companies, maybe like ONGC and Coal India.
Coal India, they have not really talked much. But in FY13, I think they have to seriously look for divesting maybe 5% to 10% stake further in that company to mobilise the respectable or sizeable divestment proceed.
Q: There has been an overrun in terms of spend for fert subsidies as well this time around. Do you think it may get addressed?
A: I think they have their constraint. I donít think that there is any scope for the complex fertilisers. If you come on urea, it is finding so difficult for the government even to go for a 10% increase in the urea because already it is getting sold at Rs 5.5 a kg against the cost of Rs 13-15. That is getting subsidised by the government.
One doesnít know how the crude will behave because everything will depend on the import parity price, if the subsidy portion gets revised upward or downward. So, I donít think the government really has much leeway in the area of urea subsidy also to play on. They can maximum increase urea prices by 50 paise because 10% is the maximum they can really contemplate to go for an increase in one go.
Q: What about HUL?
A: HUL has been the favorite stock. The kind of corrections, which we have seen, it has been holding Rs 375. I donít think that any specific positives are seen from the Budget. When you want to hide in a falling market, probably this is seen as the most defensive. That could only be the reason for an upmove today for HUL.
Q: Are there any numbers in the mind of the market either in terms of the fiscal deficit or in terms of the borrowing that may disappoint the market if it comes either way?
A: I think the fiscal deficit has to be below 5%, whether it is anywhere between 4.5% and 5%. On the borrowing front, I think it is expected that again it has to be below Rs 500,000 crore. On the inflation front, it is less than 6% or so.