Mannapuram, Sintex & Sesa Goa top Tulsian's bets

The stock analyst picks Sintex and Jain Irrigation as the stocks are positive from a trading point of view.

Below is an edited transcript of the analysis on CNBC-TV18.

Q: BHEL refuses to see any respite and has moved to the sub-Rs 200 level. What kind of potential damage could the coal linkage problem have on BHEL's earnings? Where do you think the price will stabilise?

A: I don't think that BHEL's earning will be affected in FY13. BHEL's EPS call of Rs 29 in FY12 can be lowered to a maximum Rs 25 for FY13 because the company’s orders for immediate delivery in the next twelve months are affected.

But the order pipeline could definitely shrink due to uncertainty in the power sector front. The under-ownership largely seen from institutional investors is making the stock correct as I have not been taking a negative call on the stock purely from an investor point of view.

If the PSU is able to arrive at alternative solutions and the power-generation cycle is restored, then there will be a revival of the interest in capital-goods manufacturers. So there will be renewed interest in BHEL , BGR Energy , L&T and ABB .

But currently as there are no trading calls, I don’t think that investors or traders can go short in the stock at these levels though the stock may daily correct by 2.5%. There is no conviction even for the bears to go short on the stock. But with stock passing out of the trading ambit, investors with a time-horizon of twelve months can take a fundamental long-term call.

Q: What is your fundamental perspective on Wockhardt which continues to defy gravity and is perched at a new high of Rs 1,400? What is your estimate of the future prospects for Wockhardt?

A: There are two stocks that continue to scale new highs- Strides Arcolab and Wockhardt. I do not dispute the fundamentals of Wockhardt which I recommended three-anda-half years ago at Rs 75 and maybe at Rs 300 about six months ago.

Despite the fundamentals at Wockhardt and Strides Arcolab, both stocks are caught in a trading grip. If you recall, Wockhardt corrected last week when it had moved to trade and then corrected to sub-Rs 1,100.

The stock has gone up by more than Rs 300 in a week's time. However, that doesn't justify the fundamentals and the surge can only be termed as a stock caught in a trading grip. Though, I maintain my fundamental view on the stock, it will not be at price beyond Rs 1,200-1300. So, as long as the trading party continues, you can keep riding on the momentum.

Q: Reliance and Hardy Oil are to relinquish a deepwater block NEC 2002-2001. The DGH has agreed to let both Reliance and Hardy relinquish the block - What are your comments?

A: This is of little importance. The success ratio in deepwater blocks is anywhere between 40% - 55%. So if the exploration at some of the blocks is not successful, they will not be commercially viable and will be relinquished by the contractor with the approval of the DGH which is the regulator. Overall, Reliance Industries has always had the highest success rates of 54-55% which is the best in the world.

Q: Are there any other opportunities in the midcap space, which contains a huge list of beaten-down stocks, to go long at this point in time with a medium-term outlook if there is upward move in the market?

A: One can choose pharma stocks and probably go long on Aurobindo and Orchid Chemical . Investors' next line of picks can be Sintex and Jain Irrigation from a trading point of view. Sesa Goa and Sterlite also look attractive thanks to the merger approaching conclusion.