Tulsian's views on aviation, realty, cement sectors

In an interview to CNBC-TV18 in its Closing Bell segment, SP Tulsian of sptulsian.com shares his views on why he thinks it is time to book profits in some real estate stocks. Explaining his logic for being positive on some cement stocks, he says, "I continue to have positive bias on those (cement companies) which have presence in Andhra Pradesh and Karnataka for the simple reason that they can cater to the pockets of Kerala and more specifically in Andhra."Below is the verbatim transcript of SP Tulsian's interview with Anuj Singhal and Sonia Shenoy on CNBC-TV18.Sonia: There was some news flow that foreign direct investment (FDI) of 100 percent will now be allowed in aviation. Wanted to ask you what your view is on Jet Airways because now Etihad will be able to raise their stake to majority in Jet Airways and that stock is up almost 6 odd percent. Would you play that on the upside?A: If you want to play on this theme as you have rightly said Jet only qualifies the stock where you can expect this FDI to happen, because first if you really see the whole situation over the announcements of in pharma, defence and aviation. One should not really jump for all the stocks unless and until you see the concrete use of this announcements getting used by any of the existing promoter. You cannot expect that someone will come and buy Indigo 100 percent or the entire promoter stake and will take over that airline, but that possibility seems to be only existing in case of Jet Airways where you have seen the Indian promoters that is Naresh Goyal 51 percent and 24 percent is held by Etihad and obviously we all know the kind of positive bias now seen building up in the aviation sector across the globe and more especially from the Asian airlines, because all the European airlines are seen broke.I don’t think that any of them will come forward, but these Etihad who is already has a 24 percent invested in Jet Airways will make all the efforts to see this stake getting increased provided Naresh Goyal is willing to sell that and I don’t think that why that possibility will not happen. So if you really want to play on this theme specifically for the aviation stock only Jet qualifies for that announcements and nothing else neither SpiceJet nor Indigo.Anuj: Any thoughts on Reliance Communication stock it surging as we speak.A: You have to see and you have to wait and see the deal getting consummated on June 22 along with the Aircel and if you really ask me the deal having got extended by couple of months in the first place then one month thereafter, I think the things are likely to get extended further, because the debt reduction of Rs 14,000 crore by Reliance Communication is a condition precedent for merger of both the companies that is Aircel and Reliance Communication and unless until you see the tower deal getting monetised by the company this is not going to happen and maybe on fear and on the apprehensions of that this stock has corrected to such an extent, so I do not think that any positive things are likely to be seen. Maybe day after tomorrow or maybe once the things are seen again that the deal is getting postpone, I don’t think that that will be seen quite positive so this is just seen to be maybe a short covering kind of rally and I will be keeping my cautious stance continuing on the stock as well.Anuj: A word on the real estate rally which is continuing even today? We saw traces of it last week, it is continuing. In the past you were bullish on some of the Mumbai based real estate stocks, would you buy any 2-3 stocks in the real estate pack right now?A: 3-4 calls from the Mumbai space and one Anant Raj was given by me in the last maybe couple of months. Since then in fact if you see the stocks have risen by about 10-40 percent. Indiabulls Real Estate having recommended at Rs 54-55 has risen by about maybe 60-65 percent. Day before I was with one prominent real estate consultant who is arranging the finance and all that and he was telling me that good recovery is seen in the commercial space, there is good offtake but that kind of indication has not been seen in residential space, I am talking more specially for the Mumbai pocket.So, I feel that for the near term if you really take a call on the stocks like HDIL, Indiabulls Real Estate, Anant Raj or may be for that matter Prestige Estates, I think a good run up has already happened in all these stocks and I won't be advising now to enter into it. Those who have entered earlier are now getting a profit of 15-65 percent, I will advice that they should go for profit booking and wait for some time to take a re-entry into the sector.Anuj: You have been bullish on cement stocks from the time they were like 30-40 percent lower from these levels. A current levels what would be your pecking order if you still want to buy any cement stocks?A: The stocks which I have recommended have all risen by about 50-100 percent, case in point could be NCL Industries, Deccan Cements, Kesoram, there are many kind of stocks. However still I continue to have my positive bias on those who are having presence in Andhra Pradesh and Karnataka because for the simple reason that they can cater to the pockets of Kerala and more specially in Andhra also. Taking all this into consideration, take the case of Deccan Cement which was recommended at about Rs 500, it has risen to a level of about Rs 900 in the last 3 or 4 months, still I keep a positive stance because if you go by the expected earnings for FY17, I won't be surprised to see an EPS of Rs 100 from the company. There is no point in taking the EV valuations, there are many stocks available at a EV valuation of USD 30-50.Take the case of Kesoram Industries, the kind of performance which we will see from the cement division and the clean balance sheet for Q1 because their balance sheet cleaning has happened only on April 13 when the debt has all been paid off to the extent of 75 percent. So, I continue to remain bullish on that.Next could be NCL Industries, that again seems to be a very good stock because of their particle board as well as cement division.Come on the Kakatiya Cements, the stock has corrected. We recommended the stock at Rs 160 about 6 months back, it has moved to a level of Rs 550 and now it has corrected to a level of Rs 410-415 but one undervalued stock from the cement space which is still not seen having caught the fancy of the people is Panyam Cement and that is again from the same space and ruling at sub Rs 60. I won\\'t be surprised to see this Panyam Cement moving to a level of may be about Rs 90 in next 6 months. So, these are the odd counters or the smaller ones having a capacity of 2 million tonne to 7 million tonne capacity which are still looking quite good amongst the cement space with a time horizon of 6-9 months.