Here is why SP Tulsian is bearish on Idea Cellular

In an interview with CNBC-TV18, SP Tulsian of sptulsian.com explains why he continues to be bearish on Idea Cellular. Also, he gives his views on why the bull rally seen by the tea stocks is not sustainable, unlike the sugar stocks' rally.Below is the verbatim transcript of SP Tulsian's interview with Anuj Singhal and Sonia Shenoy on CNBC-TV18.Anuj: First a word on all the tea and coffee stock now. We have seen a big rally in sugar of course play out, but now you are seeing a huge rally in tea stocks. Do you think that’s going to continue?A: I don’t think that the tea stocks one can take a sustained rally, the kind of rally which we have been seeing for sugar stocks. In fact, if you take a call on sugar stocks in this last six months they have almost increased by 400-800 percent and when I gave the buy call in the month of December and since then the prices have increased so much. I don’t think that similar kind of pattern can be seen in the tea stocks because here firstly you have very few ideas available number one.Number two, if you really see the quality of the financials or maybe the management or maybe the financial structuring of so many companies are not very healthy and in that situation it is very difficult to have the consistent or maybe a linear kind of upward movement seen in those stocks. You will keep seeing the profit booking coming in and the volatility will continue to remain there.Coming on coffee, I don’t think that you have much coffee play available here maybe except Tata Coffee andCCL and except for that there are no other shares available in that space. Maybe yes on tea stocks the positive bias continues to remain on the sector for next three months or so, but you will see the volatility in the interim period as well.Anuj: You had come out with a note on Triveni Engineering and that stock has done remarkably well this month. Of course, all sugar stocks have done well, but Triveni is the one where you had a couple of triggers. Do you think at Rs 60 also it is good buy?A: In fact, we came out with notes on 5 UP based companies that too about 3 or 4 months back and in those notes we have given the FY17 and Q4 working. At that time Q4 working was not out and we reiterate that whatever has been stated in FY17 the projections which we have given are going to get surpassed way above by these companies.Yes, I continue to keep my positive stance on Triveni Engineering, Balrampur Chini, Dalmia Bharat these 3 or 4 stocks which are in fact you have huge comfort on the inventory held by them at the valuation and the working going forward, that means in FY17 the kind of crushing which we will be seeing from them.If you take a call on the Triveni Engineering Rs 1,500 crore market cap now you knock off 23-24 percent stake of Triveni Turbine which is valued about Rs 750-800 crore that means you are getting the company at Rs 700 crore on a market cap. If you take the entire debt that is long term debt and short term debt is supported by that much inventory at the present valuation – that means you are getting the whole Triveni Engineering at a market cap of Rs 700 crore. I don’t think that you have any sugar company if you compile the data on these parameters I don’t think that you have any sugar stock so cheap available on the EV basis in the entire listed space.Yes, I continue to have my positive bias maintained because as I said earlier also while going through the Q4 numbers of Triveni they are holding 84 percent of the total production of the sugar what they have produced as inventory as on March 31, 2016, that means they have been carrying inventory of about 42 lakh bags and on that they are going to have an unrealised gain of Rs 225 crore. So, this theme is best played out in case of Triveni obviously followed by Balrampur Chini and Dalmia Bharat also in terms of the inventory held. I am continuing to have my positive bias on Triveni and as I have said that this looks the cheapest or undervalued so I am keeping my positive on Triveni Engineering going forward.Sonia: I wanted to ask you about Tata Metaliks. Ever since it came out with its numbers and there was that merger with Tata Steel that did not go through, this stock has really found a new set of wins for itself. So you see more upside on Tata Metaliks now?A: I will not be taking a call now because the trigger for this surge is calling off the merger with Tata Steel, because that merger was pending on the base on the four year old recommendation where the swap ratio was not seen in the interest of the shareholders of Tata Metaliks. Q4 working was definitely good on their core business as well as on the ductile iron pipe business also. But if you really take a call now going forward, I do not think you have much potential to go from here because maybe the volatility also has crept in into the stock. You may see two or three downward circuit once the profit booking comes in whenever a stock sees such a big rise. And unless and until you have a very clear visibility for the working of the company going forward, I do not think there is any point in taking a call. So I will not advice buying into the stock now at the current level.Anuj: A word on a couple of these logistic stock, Gati in particular. We now believe that or the market believes that goods and services tax (GST) should go through now. But do you think that most of these stocks have now priced in the news or do you see more rally in stocks like Gati and Snowman Logistics?A: I do not think that there is any, not even a 1 percent chance of GST not going through in this monsoon session. So, that has to be number one presumption. Then only you can take a call on all these logistics stocks. And if it is so that GST is going to be the reality in this monsoon session and its implementation from April 1, 2017 is going to give a lot of rerating to all the logistic stocks if you really ask me. But, unfortunately, market has just been taking on the stocks calls on two stocks only, that is Gati and TCI because those or maybe Allcargo kind of things, because those are the only two or three names which quickly comes to the mind. But at least there are 50 rating 20 stocks available in logistics space. So yes, you have to keep an eye on all and come on April 1, 2017. Once it gets implemented, that will see the GDP rising by at least 150 basis point. So, that is also going to re rate and many of the stocks and sectors which will be specifically beneficiary maybe except for one or two segments or sectors, like maybe breweries or maybe like gem and jewellery who will be having a negative impact. Overall, all the sectors will be seeing the huge beneficiary. So in fact GST passing or getting passed in this monsoon session which I say that has a probability of 100 percent, not even 99 percent, is going to vastly rerate our market and that will be seen extremely positive including for the logistic stocks as well.Anuj: A word on Gokaldas Exports. Of course, the run was a bit too much. We have seen even after today’s second down, it is still up 74 percent. Do you see this stock correcting a bit more now after the one way rally that we had.A: Two things. When we gave the call in the stock as a buy maybe about six months back when it was ruling at Rs 60, our trigger was that they are monetising the non-core assets that is the factories they are owning and second is the Blackstone, the promoters who are holding 55 percent stake in the company are looking to exit from this company, because maybe once they put the financials in order. But because of the Q4 numbers, very good numbers on the operational front coming in to the profits, the stock ran to a level of maybe Rs 120-125 and we have started giving the profit booking call when it crossed beyond Rs 110. And when you see the promoters, start booking profits, they have reduced their stake. So, maybe I am unable to understand or take a call that why instead of selling, exiting from the company, the piecemeal shading is done by the promoter. So, maybe otherwise also if this stake sale would not have been seen from the promoter or the stake reduction, still I have been advising that yes, the exit from the counter at Rs 125, because it is very difficult to see the sustained kind of profitability if they have these two quarters profit, then only the current prices is justified. So, yes, on both the counts I was giving a profit booking call and actually those similar type of calls were given in so many other stocks also if you recall Harita Seating Systems when came out with excellent numbers, shares moved to a level of Rs 600 because what happens that people start riding, chasing the momentum. And chasing the momentum is very risky in these kind of stocks, even today, Harita is down to a level of Rs 530-535 from Rs 600 which used to be a price of about maybe a couple of weeks back. So, yes, on all these stocks which were recommended way below the prices about six months back are now given profit booking call by us.Anuj: You can correct me if I am wrong, you were quite bearish on Idea, but at Rs 100 do you reckon it’s a buy or would you still avoid it?A: In fact, I was bearish on the stock for last one year largely for the shrinking margin and the huge capex, but after seeing the Q4 numbers which were really disaster after seeing the sharp increase in the interest burden having seen in that Q4, I have given a clear exit call to all that is to traders as well as investors and I continue to maintain the same negative view on the stock going forward as well.Anuj: The other big call has been Kiri Industries, what next for that you recommended it at Rs 80 about three months back, as we speak it’s approaching Rs 300.A: On March 30, I have recommended the stock at Rs 80. It moved from Rs 80 to maybe about Rs 180 in one month, maybe Rs 180 to Rs 300 today in next one month that means it has more than trebled in this last couple of months or maybe last two and a half months.You are right that people have just been focussing on the sugar, tea and coffee. In fact, I have been saying that for sugar last 4-6 months, but dye and dye intermediates or more especially the dye intermediates like H acid, vinyl sulphone they are seen to be a very big play.Coming specifically on Kiri Industries they have posted an earnings per share (EPS) of closer to about Rs 72 for this FY16 the year which has ended and I am expecting the FY17 EPS to be closer to about Rs 95. I won’t be surprised to see the EPS hitting Rs 100 also, but take conservative at Rs 95 and take price earnings (PE) multiple of just even 5 times, so the share is now ruling at Rs 300, I don’t see any reason why the share will not cross to a level of Rs 500 and apart from that in the similar space if you recall March 30 I have given many of the stocks like Bodal Chemical, Akshar Chemicals, Bhageria Industries, Shri Hari Chemicals all of them have risen by about 50-100 percent.Sometime you see that there are many quiet sectors which have quietly almost doubled or trebled. The case in point is Kiri Industries, so yes I continue to have my positive bias and Q1 numbers will again start reflecting excellent working for all these companies including Kiri and Bodal Chemical going forward, so still continue to have my positive bias in spite of Kiri Industries having trebled in this less than three months from Rs 90 to about Rs 300 plus today.