SENSEX NIFTY
Feb 04, 2013, 04.54 PM IST | Source: CNBC-TV18

Checkout: Tulsian's view on BOB, IFCI, Jubilant Food, BHEL

State-owned Bank of Baroda’s net profit dropped nearly 22 percent year-on-year to Rs 1,012 crore for the quarter ending December 31, 2012, dented by higher provisions against bad loans. SP Tulsian is bullish on the bank and recommends entering into the stock with a positional view.

State-owned Bank of Baroda's net profit dropped nearly 22 percent year-on-year to Rs 1,012 crore for the quarter ending December 31, 2012 , dented by higher provisions against bad loans. SP Tulsian is bullish on the bank and recommends entering into the stock with a positional view. In an interview to CNBC-TV18, Tulsian says, "If you put a stop loss of 2 percent it may get triggered maybe in this week, but if you keep a positional view again in the series, I am expecting price to move back to Rs 860 because overall quality and the business of the bank remains quite robust."

Further Tulsian also shares his views on IFCI , Jubilant Foodworks , BHEL .

Below is an edited transcript of Tulsian's interview on CNBC-TV18

Q: What are your thoughts on BOB numbers? How should an investor approach the stock now after the 7.5 percent correction?

A: Definitely, disappointing number. If you see the asset quality and the overall parameters, provisions and all are looking quite dull. However, BOB swiftly moves up. Once it gets corrected maybe to the extent of 7-9 percent, then people start taking a negative call on a secular basis that maybe it will remain weak going ahead. Since, I am keeping my positive view on Bank Nifty when the series had started, I had given a target of Rs 13400-13500 and I maintain that same target is likely to be seen in this series.

BOB being the frontliner bank, has a very good trading up move whenever the stock gets corrected it swiftly goes up in the similar fashion. In case of Punjab National Bank ( PNB ) ahead of the poor numbers the stock corrected but on the day of the good numbers the stock moved back by 7-8 percent.

I agree that the results in case of BOB have been very poor, but I don't see a downside beyond 3 percent from hereon. Maybe one can take a level of Rs 775-780 that will look a contrarian call to take long positions at those levels but I will be recommending. Even the brave traders can look to enter now at about Rs 800, but with a positional view. I don’t think that the stop loss strategy can work in this.

If you put a stop loss of 2 percent it may get triggered maybe in this week, but if you keep a positional view again in the series, I am expecting price to move back to Rs 860 because overall quality and the business of the bank remains quite robust.

Q: There is a stake sale buzz again in IFCI and that is the reason why the stock has moved up quite a bit today. In the past, we heard comments from the government where they indicated that they are not willing to pair down their stake. How would you approach all of this contradictory news flow?

A: I have maintained my view that this stake sale is not possible at all. Now the government is holding 56 percent stake after they converted their 523 crore and 400 crore, that is in all 923 crore convertible debentures and optionally convertible debenture, they have acquired a stake of close to 56 percent.

In the second term of UPA, it was decided that the government will not be divesting their stake in any of the PSUs below 51 percent. That means they have to keep a stake of at least 51 percent. I am unable to understand that can you put an exception in case of IFCI that you have acquired the stake during the year and now you want to get rid off. This is because once government having acquired the stake in IFCI to the extent of 56 percent, it has become a government company and now they are governed on the floor of the parliament.

In the presidential address it was given that 51 percent stake will be kept by the government in all the companies and I am going by the same premise. Secondly, there has been no business model, except for the real estate assets in the books of the company, like commercial space of about 4-4.5 lakh square feet, 3 lakh square feet of IFCI tower and the residential. I don’t think it will be attracting anyone.

Even the credentials and the past track record of the company will not give any privilege or the opportunity to the prospective buyer to go for the banking licence. So, taking all this into account, those who are holding the trading positions in the stock that seem to be held by quite strong hands, they are in fact making this news to come on and off, but this stake sale or may be inducting a strategic investor in the company is totally ruled out. This has to remain a government company with 51 percent stake to be held by the government.

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