Positive on Sterlite, Tata Power, PFC, REC: Tulsian

SP Tulsian, sptulsian.com, says that he is not surprised with Sterlite move to exit from the Nifty by September end. However, he feels it is a very logical and a calculated move by the company. He is of the opinion that the merged entity has the benefit to take advantage of all natural resources.

With news of a possible power tariff hike by Maharashtra government by 16.5%, stocks like Tata Power, PFC and REC are likely to have a positive impact. Below is the edited transcript of his interview to CNBC-TV18 Q: Were you surprised to see Sterlite exiting from the Nifty come end September and as an investor what should one do with the stock?
A: This is a logical and a calculated moved in view of the Sterlite, Sesa Goa merger. The merger was announced about four-five months ago and now the process is almost at the completion stage, where five Serlite share will be converted into three Sesa Goa share.
I am holding a strong positive view on the future prospects of the stock because post merger, Sesa-Serlite will have advantage of all natural resources like non-ferrous, ferrous or crude in one company. There are chances that this entity may bag a spot into the top 5 profit making companies into the listed space. Q: There was news that Maharashtra government is planning to hike power tariffs by 16.5%, are there any stocks or companies, listed companies that would be impacted?
A: This is a positive move. Stocks like PFC, REC and Tata Power will have a positive impact. Q: Most real estate companies have indicated that they have not been able to push sales volume even if realizations have not much gone down, all are debt-laden companies or many of them are desperately trying to sell-off its assets, are there any indications from Q1 that somebody is doing a better job?
A: I have a positive call on HDIL. The Q1 result indicates that the volume of Rs 200 crore has come purely from the sale of FSI and not TDR. HDIL is expected to complete four of their projects by the last quarter of FY13. Since they follow the project completion method, improvement will happen from Q4.
The company is expected to sell their TDR from Q3 and plans to generate two million sq ft of TDR in this financial year as well. Thet have indicated that they will reduce the debt from Rs 4,000 crore to Rs 3,000 crore.
Real estate properties in Mumbai are still enjoying a good demand in terms of under-construction, TDR, floor space index (FSI) or plot sell because the case in point is DLF where they have been able to sell to Lodha inspite of lower offtake.
So they are not going out from their core activities of the development like seen in case of DLF, they will be realizing close to Rs 1,000 crore from sell of TDR and FSI which is positive and the completion of the projects, some of the projects in this financial year will also help.
So, I have a positive call on HDIL and the stock can move to Rs 120 in next four-six months. Q: What impact will Australia's tough anti-tobacco marketing law will have on ITC. Is this a reason for profit booking or do you see real worth there?
A: This is just a reason for profit booking. Nothing has happened despite many campaigns against anti-tobacco. However, this news is a trigger for the stock to correct. We already saw that the stock hitting new highs so profit booking was warranted in both ITC and HUL. ITC has a strong support at Rs 250 and is a good entry point.