In an interview to CNBC-TV18’s Latha Venkatesh, Anuj Singhal and Sonia Shenoy, SP Tulsian of sptulsian.com shared his readings and outlook on market and specific stocks.Below is the verbatim transcript of SP Tulsian’s interview to Latha Venkatesh, Anuj Singhal and Sonia Shenoy on CNBC-TV18.Sonia: We are picking some exclusive information that TPG is likely to buy stake in Fortis and that the deal will be announced anytime in the next 10 days or so. The stock has run up significantly over the past couple of months but how do you approach it here on if you have tracked that space? A:
There are two news lined up, first you need to take a view on the fundamentals and second is this news of TPG buying stake into the company. Now, we all know that the Singh brothers have been trying to exit from the company but again the model or the modalities on which the divestment or maybe the monetisation of their stake is likely to happen is not very clear because as gathered from the media reports, they are all looking for piecemeal divestment. I don’t think that how much valuation they can really fetch for that.
Coming on the financial front, maybe their diagnostic business getting hived off or maybe the improvement in the financials were all not seen into the company. So, I have been keeping a negative, I won’t call it negative but as a neutral stance on the stock because if you see in the healthcare space there are other ideas available like Apollo Hospitals which has been the consistent performer and people have been trying to correlate Fortis also with Apollo Hospital
for maybe ages, maybe for last four to five years. However, the investors having invested in the stock have got highly disappointed.
So, I won’t be keeping any positive stance and it is always risky to chase the stocks where you don’t have high conviction at the upper level. So, I will be keeping my neutral stance, I won’t be taking a call of buying the stock now at the current level. Anuj: I will never get tired of asking this question because this rally is continuing unabated. Sugar, of course you recommended these stocks when they were 20 percent of current market prices but you have been still bullish on the UP based sugar stocks. What would be the pecking order now and can we still expect another 20-30 percent gain from here? A:
Let me bluntly say this that the media and analysts have not understood this story, let me say that without any hesitation. In fact there are two rounds; let me correct you that the stocks having recommended by me about 18 months back have given a 6-8x kind of return, 600-800 percent return. However, apart from that, on November 18, if you just rewind the shows of your channel and all that, on November 18 and November 21, I have been giving the screaming buy on all the UP based sugar mills.
On our anniversary issue on December 7, I just gave an example, Dwarikesh Sugar at Rs 290 and today the price is Rs 410; that means you have seen a gain of 45 percent in one month. If you really see the situation now, all the -- in fact if you take first let me give you a fundamental call that UP is the only state which will be producing the quantity of sugar more than what they have produced last year, that is last season. They are producing last season 69 lakh tonne, this year they will be producing 72 lakh tonne. Now, if you see Maharashtra and Karnataka will be seeing a drop in the production by about 30-40 percent in this season, over season last year. In fact ISMA has been maintaining production target of 234 lakh tonne for this season which I have categorically said that it is not likely to exceed beyond 210 lakh tonne and maximum 215 lakh tonne. In fact I am sticking to my view of 210 lakh tonne.
Now, before that let me just give you a quick effect of these UP elections. Now, the code of conduct have come in, people were earlier expecting that probably government will reduce the import duty to zero to control on the prices but nothing can get announced now by the central government either on account of the quantity freeze, maybe the stock is freeze, or maybe cut in import duty or any kind of relation to sugar because UP being the sugar based state because oppositions will not leave them. So, government has to tolerate whatever is happening on the price front which has already started moving up.
On the global front, if you see white sugar have gone to USD 540-545, that is FOB which translates into Rs 37-38 per kg. Raw has gone to 20 cents per pound in the international markets. Domestic prices have started moving to Rs 36-37. So, if I say across the board on the UP based sugar mills, still I expect the prices to move up to 25 percent from current level. However, now, the ideas are to find out the companies because people are just lapping any company with the name sugar. Now, you have to identify the sugar stocks which doesn’t have the tag sugar to their name but they have a significant presence. If you ask me to identify two stocks which are having significant presence in UP, one is DCM Shriram Limited
and second is DCM Shriram Industries Limited
DCM Shriram Industries Limited is listed on BSE, they have presence in sugar, they have presence in industrial fibre, chemical while DCM Shriram Limited is having presence in sugar, caustic soda, agri marketing, and so many other things, seeds and all that. Both the stocks are looking equally promising and probably they will outperform as I am giving a gain of 20-25 percent still on the UP based sugar mill, probably both these duo may perform or give a return of 25-30 percent, maybe 5 percent higher than what other UP based sugar mill will be giving you in the next three months or so.