Infra stocks uptick due to NTPC's project shower: Tulsian

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Infra stocks uptick due to NTPC's project shower: Tulsian

SP Tulsian of sptulsian.com spoke to CNBC-TV18 about certain stocks that are on the move. Check out his suggestions on how to play them to your advantage!

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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 BHEL BSE | NSE 29/05/12 Are Mutual Funds betting on BHEL? Other Stocks in this news NTPC | BGR Energy Systems | ABB | Larsen and Toubro | Alstom Projects | Coal India | Gayatri Projects | Lanco Infratech | GMR Infrastructure | Monnet Ispat | GVK Power & Infrastructure | IVRCL | Kingfisher Airlines | United Spirits | United Breweries | Mangalore Chemicals and Fertilisers |

SP Tulsian of sptulsian.com spoke to CNBC-TV18 about certain stocks that are on the move. Check out his suggestions on how to play them to your advantage!

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: What's been driving BHEL , the hope of large NTPC order or something else?

A: It is a combination of two factors. Obviously, the NTPC order is the trigger for that and that is a trigger more for BGR Energy . The kind of run-up which we have seen in that stock, after all, it is obviously the largest beneficiary. Then there is BHEL that comes in the second place. Second, there are no indications of this stake sale by government even via auction route because of the dissent made by the heavy industries minister. That probably has impacted institutional investors that if they delayed their acquisitions, then probably they will miss the bus and hence the rerating of the stock. Thirdly, if you see the overall positive built-up happening for the capital goods sector because of the clearances to power sector now, that deadline of March 2015 is going to be met by all these power generation companies. That's a reason for the run up in ABB , Siemens , BHEL, L&T , Thermax , Alstom Power ... all these capital goods stock have started moving up. These are the factors which are making BHEL too to move up.

Q: What about Coal India ? It fell 5% on the FSA news. Today it has managed to stabilize. How did you read it?

A: I was not convinced with the yesterday's fall because I don't see any reason. Yesterday, there were lot of apprehensions. I have heard people talking that Coal India is going on the lines of the oil marketing companies... I think that was the extreme interpretation or pessimism having built for the company because if you see the commitments or the PMO directives, I don't think that it will really affect the company so much.

There are many avenues for the company to increase production, to improve productivity and they have time for the power projects up to 2015. Definitely, the procurement of coal can very well be made from Africa or from Indonesia.

I don't think that there really is dearth of coal availability, but yes, there were lot of apprehensions that probably it will be very negative for the stock. It's a typical behavior for Coal India which we have talked in the past also that it is holding a range of Rs 310-350. The moment it reaches to Rs 345-350, you start seeing some kind of negative news which acts as a trigger for profit booking and the moment it reaches to about Rs 315 or so, you have some kind of value buying or maybe fresh longs getting created. So it has been moving in a tight range.

If you see for last 45 days' price behavior, I don't think that it has really participated in the market rally but it has been moving in that range and I don't think that the PMO directive will anyway be negative for the stock. On the contrary, it will be acting as a positive for FY13 for the company.

Q: Is the move warranted on Lanco ever since its numbers?

A: In many of the cases, liquidity crunch and solvency or profitability of the company has been mixed up and that has happened again with Lanco. Even if you leave aside results on which I have my positive view because results have been quite good, apart from that, the company has given indications that they are looking to monetize about Rs 3000 crore from the power portfolio.

There are typically two-three companies which are really stuck in a very big way. One is Gayatri Projects which is a very small stock, but has huge joint ventures with four-five companies, and all the thermal power projects are under creation which are scheduled for completion on or before March 31, 2015.

Lanco has been struggling for want of funds. I am not including the Monnet energy or may be GMR or the GVK kind of things because there the promoters are capable of raising funds on their own. So if you take a call on these type of companies, I think that is a very substantial positive for the stock and I won't be surprised to see the run up which we have seen in the stock like IVRCL that the same rally continues. I am not talking on a technical basis. May be the stock can correct in the next couple of days, but if you take a little longer call, may be of next couple of months, I think the stock can very well still rise by about 50% from the current levels in case of Lanco Infratech.

Q: What would you expect to hear from Kingfisher Airlines later this evening? Do you think there will be a final form and structure to restructuring or are there still too many differences between the two parties?

A: I don't think that anything concrete will come out but yes, all these stocks indicates that management is serious and probably that is at the back of the assurances or maybe some potential strategic investor coming in into the company at very good valuations. We cannot really play on the news of any foreign airlines coming in which is not very long away, but yes, the management is quite serious, largely because of all the investments of the other group companies whether you talk of United Spirits , United Breweries , Mangalore Chemical have been stuck as a pledge or as a guarantee. So definitely, management is taking a call on the restructuring or straightening the investments of the entire UB Group which is a compulsion for them. So things will get resolved, but I don't think that it will really happen so soon.

Q: In this NTPC order which is expected to come, even BGR Energy could be one of the beneficiaries. How does BGR Energy stack up and would you be a buyer?

A: BGR Energy will be the largest beneficiary ahead of BHEL, but the kind of run up we have seen in case of BGR for last 10 days or so, in spite of the dull Q3 results, the stock has not corrected except for a day or two. So I will be keeping my cautious view on all those who will be seen as a beneficiary of NTPC orders - the 9-10 power projects, turbine orders. Probably I will keep my cautious view on all the capital goods stocks including BGR, because it is not the time to create fresh longs. Those who have been holding either as an investor or as a positional trader can continue to do so, but fresh buying is not recommended to get created in these stocks.