Pantaloon can touch Rs 165-170 levels: Tulsian

SP Tulsian of sptulsian.com says that the hike in diesel price maybe put on a hold for a week or more. He also says that a rollback of couple of rupees on the petrol hike cannot be ruled out at this stage.

For Pantaloon, assest mobilisation and FDI are two positive factors for the stock. He is however negative on Reliance Power.

Below is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video.

Q: What are you hearing with respect to petrol and a possible rollback and can we expect anything concrete from EGoM tomorrow with respect to diesel hike?

A: In respect to diesel hike, EGoM is not likely to happen due to unavailability of oil minister. The Congress has also hinted that diesel price hike is not required, maybe keeping in mind the discomfort from their allies’ partner or a possible uproar among their partners. So, probably the hike in diesel price maybe put on a hold for a week or more.

On petrol price hike, the steep hike of Rs 7.50 per litre is seen quite high even by general public. The government should have broken the current hike in two parts which could have made sense and easy for the people to digest the hike in a phased manner. I won’t be surprised if a rollback happens.

We were passive on this front for last three to six months. OMC have hinted that, if the rupee goes back to 53-54 levels and if there is any softening on account of crude or exchange on currency, they won’t hesitate to reduce the prices. So, maybe even a rollback of couple of rupees on the petrol hike cannot be ruled out at this stage.

Q: What is your view on Reliance Power from trading and investment angle?

A: No, I don’t have an investment call on this share. The result looks slightly better because Rosa has started production of 660 megawatt (MW). The only surprising part of the results is that the 660 MW phase II has started in the end of March but when you see the interest and depreciation on a sequential basis, less is happening on that account which contradicts when we put some assets to use in the month of March.

As to why, there is no increase in the interest and depreciation, but even if you take an overall call, there is a gradual addition even for Sasan they said that the first unit of 660 MW will start by December 2012 and the mining will commence in Q2 of FY13. It is a gradual process.

Capacity addition is happening but I don’t think that one can take an investment call because the recent rise in the share price of Reliance Power is unsustainable. In past, when the FSA news came in a month back the share moved in the range of Rs 115-120 but again corrected sharply from that level. So I don’t think that one can take an investment call in the stock even at these levels.

Q: Should one look at Pantaloon in hope of some FDI in multi-brand retail?

A: There are two triggers for this stock; one is news of some hope of FDI which kept the stock moving today in the upward direction and second is asset monetization, these are the news of quite a big respite for the stock either on account of the deleveraging of the balance sheet or hopes of the fresh funds coming into the company in the form of FDI if it happens and that is the trigger for the stock to move up for the next couple of days. There is news that they are looking to exit from Future Generali. The stock can continue its upward move maybe at a level of about Rs 165-170 we will see the profit booking coming back into the stock.

Q: Crompton Greaves is weak ahead of its numbers tomorrow. What are you expecting this time around?

A: Crompton Greaves was expecting a better H2 performance but that did not quite happen in Q3.

Definitely, some improvement has happened, but again it’s very crucial to look for the share price behavior ahead of the results because we have seen that happening in case of Voltas and Tata Power where the damage has happened to a great extent ahead of the result.

We are witnessing the same pattern in Crompton Greaves which indicates that we may not see exciting numbers again coming in from the company, but generally Q4 is always good for the capital good as projects are completed ahead of March. I think results should be much better than Q3, but I don’t know whether that will really be meeting the market expectations or not.

Also Read:Will partial rollback of petrol price hike impact market?