RIL to do better in Q4, bullish on Tata Power: Tulsian

Reliance Industries' fourth quarter result is scheduled to be announced today, April 16. SP Tulsian, sptulsian.com sees marginal improvement in Q4 result of the company because of slight upmove in the gross refining margin.

He expects the company to post a profit after tax (PAT) of close to Rs 5,555 crore in comparison of Rs 5,500 crore in Q3. He told CNBC-TV18 that he is very positive on Tata Power. He believes that it has been stable inspite of negative working in the last three-four quarters. In the next couple of months if the price hike comes, Tulsian expects the stock to move to a level of Rs 110. Below is the verbatim transcript of his interview to CNBC-TV18 Q: First on Reliance, any out of the box performance expected or do you think it is going to be a sluggish quarter as most expect? A: It will be identical on the lines of Q3 and it has been perceived as the best quarter by the market. So, I don’t think that market will really be disappointed or one can really call it as a sluggish quarter. The company is expected to post a profit after tax (PAT) of close to about Rs 5,555 crore. For Q3 company has posted Rs 5,500 crore of PAT. On a sequential basis, I think there is a marginal improvement because there will be slight upmove in the gross refining margin. There will be a better performance from the petchem. However, upstream because of the fall in the KG-D6 gas production which is now at 16 mmscmd and is going to disappoint. So, overall if one sees the two core sectors, refining and petchem, they are likely to do better. In fact people have been talking that there are some concerns in respect to the contraction of the GRM, but that has started from the second half of March. So, that won't have much significant impact. For whole of the quarter, the spread has been very good between the light and heavy, the differential have been very good. I think the market is likely to be satisfied with the performance. Also read: Don't rush to buy gold, silver; RIL results eyed: Experts
Q: Yesterday, the biggest blow was for the gold finance companies. Given how things have transpired overnight, would you expect to see more pressure on these stocks? A: It is likely to continue because all the companies have their gold portfolio especially Mannapuram and Muthoot. They have a good amount of gold portfolio. If one has the erosion happening and the kind of outlook, which they have been seeing coming in, definitely there is bound to be some interest reversal in the first quarter as well. If one takes a call that probably beyond a point when these companies will be financing against the solid gold. This will not see the defaults happening to a great extent. However, yes, inspite of taking all the arguments of both the sides of the gold lending companies as well as the kind of erosion which we have been seeing in the gold process that we are going to see the further erosion in the share prices of both these companies. Q: How would you approach Tata Power now after the Central Electricity Regulatory Commission (CERC) recommended that compensatory tariff? A: Very positive for the stock. In fact the kind of order which has been made by the CERC that there has been apprehension and it will get opposed by the distribution company (DISCOM). However, I don’t think that oppose will have any basis. Here, the CERC has ordered that DISCOM and Tata Power should form a committee where again the grievances or maybe submissions of each party will be heard.This will be seen quite positive. Amongst the power generation companies, Tata Power seems to have been the most stable inspite of having a negative working in the last three-four quarters. The stock has not really corrected below Rs 90. It has gone below Rs 80-85, but again has bounced back and has been holding. So with this kind of order coming in and if the price hike comes soon, maybe in next couple of months the stock can again move to the level of Rs 110.