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Last Updated : Jul 18, 2016 07:38 PM IST | Source: CNBC-TV18

Tulsian's take on telecom, 2-wheelers & oil majors

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com shared his views on two-wheeler majors Hero Motocorp and Bajaj Auto after the stocks hit their 52-week highs. He also discussed why he is not excited on Oil India and ONGC and what keeps him skeptical on telecom companies.

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com shared his views on two-wheeler majors Hero Motocorp and Bajaj Auto after the stocks hit their 52-week highs. He also discussed why he is not excited on Oil India and ONGC and what keeps him skeptical on telecom companies.   

Below is the verbatim transcript of SP Tulsian's interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18.

Sonia: The two wheeler stocks have hit new highs today, 52 week highs both Hero Motocorp and Bajaj Auto. How are you positioned on these names now?

A: If you really want to take a fundamental call I don’t think that there is any reason for them to rise in isolation maybe because then you have to take a call on the stocks like TVS Motor also because ultimately the last data point which we have in front of us is the monthly sales figures for the month of June and amongst all three TVS Motors had the better performance, but actually Hero Moto and Bajaj Auto both have seen on the positive list of the fund buying and that has been seen for last couple of months and I won’t be in fact if you take a call on the May sales numbers of both these companies Hero Moto and Bajaj they have not been seen so great in comparison to the TVS Motors, so the stocks are actually maybe on the hopes of a good monsoon seen coming in with goods and service tax (GST) also getting implemented overall positive bias seem building up, the two wheeler stocks are seen in focus and they are seen as the big beneficiary of the good monsoon seen across India.

So that could only be attributed as the reason, but if you really take a range they again corrects by about maybe Rs 100 or so in case of Hero Moto and in fact for that matter you can include the TVS Motors also. They have all been trading in a range with a TVS Motors moving in a range of Rs 15, Bajaj Auto and Hero Moto moving in a range of Rs 100-120.

Sonia: I wanted your thoughts on some of these telecom stocks as well, the likes of Idea Cellular down about 5.5 percent now. How should an investor read into it?

A: Actually we have been talking on the volatility of these stocks which we have been witnessing maybe for a last one month or 45 days it corrects swiftly then again goes up by maybe couple of percentage and again people start taking a positive call, but if you really see the scenario going forward the kind of statements which we have seen from Sunil Mittal where he has clearly said that the pressure on the revenue or maybe on the margins of the company will continue, the kind of spectrum auctions of over Rs 5 lakh crore which we will be seeing in the next couple of months lined up by the Government of India in the alone 750 megahertz, so if you really see already the balance sheets of all these telecom players are seeing leverage or stretch and further leverage and stretch will come in the form of the huge payment of even if the reserve price is accepted as the price then further payment of Rs 70,000-80,000 crore can come in this financial year and recently the news yesterday or the day before we have seen that the data charges have been reduced by Idea and Airtel both in view of the competition to be seen from Reliance Jio. Honestly, I am unable to take a positive call and I don’t understand that why any fall or once the stock stabilises why people take a call as an investor. If you are a trader keep swinging to this volatility, but otherwise I don’t see any reason for these shares to even bounce back from here on the weakness is likely to continue.

Anuj: Your reaction on this royalty news. In the morning it was expected that the bigger hit would be for Oil India and minor hit for ONGC, but as we speak ONGC is down 4 percent?

A: Again for ONGC also we have discussed 3-4 days back when that kerosene subsidy, the price increase is expected from July to March 2017 Rs 0.25 increase at that time we have said that this will be seen positive and at that time also I have stated that you cannot take a positive call on ONGC in spite of we have seen the huge burden of the petrol and diesel under recovery going away, so both the companies will remain a victim of the adjustments to be made by the government on account of these. If you see these companies making profit at that time also I have stated don’t surprise to see the royalty getting increased and at that time I have given an example also for some reason crude goes to USD 60 you don’t have under recovery, you will find the royalty or the cess getting increased on the crude, so both the companies are seen to be the milking cow or adjustment for the government whether UPA government or NDA and that’s a very what you call not a rationale move on part of the government unless until they come out with a clarity, but you just cannot suggest and give the suggestions to the government, so in the current situation it is better that we remain away and at that time also I have given that probably Rs 210-240 is seen as a range if you are a trader look to buy closer to Rs 210, if you want to exit look to sell at around Rs 240.

Anuj: You have a thought on Aro Granite?

A: Tamil Nadu was seen to be the largest producer, if you go to the Tirumala temple, even today you find the steps are all of the rough granite and at that time the Tamil Nadu government I would say that foolishly took a view that they stopped the raw granite block exports. At that time the diamond cutting tools and all that installed by many of these granite makers have all gone into the dump. There may be very few companies, just to give you a background even Atul Nishar of Hexaware he tried to put the granite processing plant and all that, that was the flavour, those used to be the days - aqua culture, granite processing plants, so those were the days of - I don't remember exactly but may be somewhere in the year 1988-1991, those were the time. Government policy has really killed this industry.

However coming on Aro Granite, in fact two results which I am keeping an eye today, one is on Aro Granite and second is on Bharat Bijlee. If you ask me I don't expect any kind of positive reaction to be seen into the share price from the results of Mindtree or may be Exide Industries or may be HUL as they will be posting huge losses. So, I am keeping an eye on Aro Granite and Bharat Bijlee and both are likely to post good numbers. We have already seen good numbers from Aro Granite, I am keeping a watch on Bharat Bijlee. So, I am just keeping a watch on these two stocks and I don't have any calls on the rest of the results which we will be seeing today.
First Published on Jul 18, 2016 07:38 pm