In an interview to CNBC-TV18 SP Tulsian of sptulsian shares what makes him upbeat on paper companies and cautious on tyre stocks. He also shares his analysis of the second quarter results of Lakshmi Vilas Bank and ICICI Bank post the Essar Rosneft deal. Below is the verbatim transcript of SP Tulsian's interview to Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Sonia: Any thoughts on Orient Paper & Industries it’s now up about almost 4 odd percent?A:
All the paper companies are going to report very good numbers I wish to draw attention here of the viewers that we need to look to the paper industry in two parts; one for the writing and printing and other for the craft paper. If you see writing and printing because of the three plants of the Ballarpur Industries
Limited (BILT) having closed, there is a very good offtake with the pricing power and coming on the craft paper because of the e-commerce sales and the kind of consumptions which we have seen in the boxes and packaging that is also seen to be giving very good margin and mind it in the craft paper you have a very low cost of production, you don’t have pollution problems because you don’t have to bleach the paper, so what my point is that overall the paper stocks are going to report bumper results and that is what I have been saying that. It is only the matter of analysis that how much growth and what efficiency has been posted by each company, so similarly for Orient Paper it goes in the same way that the results are looking really good.Sonia: Any comments on Lakshmi Vilas Bank numbers?A:
Numbers are definitely looking disappointing on the asset quality, because if you see net non performing asset (NPA) rising by about 60 basis points or maybe exactly by about 46-47 percent that will not go well, but I won’t be taking this as a negative call on the bank because we have been keeping a positive view, but you are right in saying that the kind of rise which we have seen in this few banks maybe like Karnataka Bank, Lakshmi Vilas, Federal Bank they all are seem to be taking a pause now and maybe this kind of results which have given some kind of disappointment on the asset quality are bound to see the profit booking, but we are not taking a negative call merely looking to these results which are definitely dull and bit disappointing.Latha: would you buy any of the tyre stocks now that the prices are correcting?A:
I have been giving a cautious view and profit booking view if you recall for last one week when I have said that the prices have seen running too high and I don’t think that fundamental justify and when I gave a comparative call on Kesoram
that that looks better if you really want to take a call, so I will definitely be keeping cautious view, because the kind of run up which we have seen will not get justified by the Q2 numbers which we will see from all these tyre companies.Latha: Your last thought on ICICI is it good to go more?A:
Maybe some sentimental effect will be seen, because this is seen a big positive but what I am worried about the companies or maybe the ICICI Bank
’s performance that you had a news flow about one month back or maybe 20 days back that they have sold the exposure to Essar Steel to the asset reconstruction company, so sometime you wonder whether the bank had the information on the developments, even market was aware that group is looking to exit from Essar Oil completely ahead of the delisting move, when the delisting move has really happened at a very hefty way, what was the logic, why the banks are not proactive and recovering, because you just can’t create a compartment or create a Chinese wall for each company if the promoter is same. You just can’t say that this exposure is to Essar Global or this exposure is Essar Steel or this exposure is to Essar Oil or this exposure is to Essar Power.
I am not happy with the conduct of the bank which we have seen in case of ICICI Bank and that is probably bothering to many of the analyst, you just can’t focus only on this Essar Oil news which is definitely seen a positive, we will be seeing the debt getting reduced by about maybe 50 percent to about Rs 45,000 crore will get reduced, that is definitely seen a positive but I don’t think that people will really are seen very happy with the conduct on part of the ICICI Bank and that’s the reason ICICI Bank and Axis Bank
both are taking a beating and not responding to the news, which otherwise would have been very big.