SP Tulsian bets on banks, autos, cement next week

SP Tulsian of sptulsian.com is positive on the cement sector and picked Ambuja Cements, ACC and UltraTech Cement. He feels that even the mid-sized cement companies will start showing improvement in their share price.

In the first week of this new series starting from Monday, he is keeping a positive stance on the banking stocks, both on private and public sector.

Also read: Expect market rally to continue; buy HDFC, HCL: Sukhani

In his view all the real estate stocks seems to have bottomed out, but on a relative basis Unitech can give better return. He told CNBC-TV18 that from the fast moving consumer goods (FMCG) space he is positive on Tata Global Beverage.

Below is the verbatim transcript of his interview to CNBC-TV18

Q: What is the list of top events that are lined up for next week, in the form of sectors or individual stocks?

A: Probably, I will keep my positive view on the cement sector because this time the dispatches are likely to be good. I do not think that we are going to see any kind of disappointment. So, one can keep a positive stance on Ambuja Cements, ACC and UltraTech Cement. Even the mid-sized cement companies will start showing improvement in their share price. That is largely because of the destruction or the erosion in the valuations happened, which has reached to the compelling levels.

Second would be the auto numbers and probably Ashok Leyland, TVS Motor Company and Hero Motocorp could disappoint in that space.

In case of Maruti Suzuki India, even if there is disappointment it is largely factored into the price. I will be keeping my positive stance on the banking stocks, both on private and public sector. The kind of value erosion, which we have seen in the stock and the under ownership coupled with the short covering, that applies to all.

Public sector undertaking (PSU) as well as the private sector may see some momentum alive in those stocks in the first week of this new series starting from Monday.

Q: The big insurance deal took place last week with Pantaloon selling its non-core assets to Larsen and Toubro (L&T) and the stock did not have a very good reaction to it. How would you approach it?

A: March series indicated that the stock is into the bear grip. Probably that was the reason of holding the stocks either on the positive or on the negative side, inspite of the contrary news coming in the stock does not move up. However, I see this deal happening on the company already completed the life insurance front, now they have competed on the non-life business also. This seems to be quite positive and nothing has got factored in.

So, probably the effect of that will be seen in this week or this series. There I will not be surprised to see the share moving up more than 20 percent in this series itself. That is a reason I advise buying the stock at Rs 150 either as a short-term investor or as a positional trader.

Q: There was some recovery in the midcap space on Thursday. Are there any more buy ideas that you would have either as a trading view or as an investment opportunity?

A: I have chosen different stocks from the different sectors. Firstly, Unitech in the real estate space, my view is that all the real estate stocks looked to have bottomed out. Whether one talks of Indiabulls Real Estate, Housing Development and Infrastructure Ltd (HDIL), DLF or maybe Unitech. Given the choice, Unitech comes in my mind that on a relative basis, this can give better return.

The second stock which comes in my mind is that I am keeping very positive view on the PSU banks going forward. Prominent amongst them could be State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB), Bank of India (BoI), Oriental Bank of Commerce (OBC) and Union Bank of India (UBI). However, I have chosen BoI because if one goes by the financials and fundamentals, Rs 48 earnings per share (EPS) for FY13, price to book of 0.8 can make the stock to move up by 6-7 percent in this series.

The last stock which I have chosen from the fast moving consumer goods (FMCG) space is the Tata Global Beverage. That stock has been languishing or has corrected in these last three-four months. However, for whole of March series we have seen a very beautiful accumulation pattern where the stock has not broken, Rs 120. From there it has not gone beyond Rs 130.

So, now with fundamentals intact and the positive view on the stock, this stock having accumulated by the value investors can give a breakout in this series and can move more than Rs 140. These are the three ideas practically from the midcap space, which can be considered.