Bank Nifty may touch 13500-13600 in Feb series: SP Tulsian

A couple of banks like Punjab National Bank (PNB), Union Bank, Dena Bank, Allahabad Bank and ICICI Bank released their numbers today and thrilled the market with soaring profits. SP Tulsian of sptulsian.com tells CNBC-TV18 that the worsening has stopped for banks and there is improvement in the asset quality and the apprehensions that people are expecting from the banks.

Further Tulsian is bullish on Bank Nifty for the February series with a target of 13500-13600. "Once you see the stocks of banks moving like the PNB today, the stocks move up by six-eight percent and that gives a boost to the Bank Nifty," Tulsian adds.

Below is an edited transcript of Tulsian's interview on CNBC-TV18 Q: There is a trend with respect to asset quality in PSU banks, are there any signs of bottoming out, the worsening of asset quality pressure? Is this a good time to buy banks?
A: The worsening has stopped at that level, but yesterday a lot of apprehensions were there on PNB that they may not be able to show good numbers. But considering the results posted by PNB and Union Bank and Allahabad Bank, we have seen the asset quality improvement, the apprehensions that we are expecting in case of all these banks. The one bank which remains to be closely looked into is the Canara Bank.
I am not taking call on the SBI for the time being. But, if you take a close look which will be declaring the results again on February 8, by and large you have the better numbers being reported by them. The only matter before these banks will be more of the credit growth because the credit growth seems to be somewhere languishing in all these banks this month. Also Read: PNB thrills mkt, posts 14% profit growth on low provisions
Since now the base rate has been curtailed by about 25 basis points by all the banks – let us hope that things will start improving. That is the reason I am keeping my positive stance on the Bank Nifty for the February series with a target of 13500-13600. Once you see the stocks moving up the way we have seen today in case of PNB - suddenly you see if the banks have posted good numbers, you see the stocks moving up by six-eight percent and that gives a boost to the Bank Nifty. So yes, positive stance on the bank, overall on the PSU banks.
_PAGEBREAK_ Q: Do you think the sentiment has turned around on Suzlon?
A: The moment the loan got restructured of Rs 9,500 crore by 19 banks, that was the biggest overhang. I don't think people were taking a call more on the profitability. Top-line is very healthy at USD five billion, Rs 25,000 crore plus. All concerns were on the debt of about Rs 9,500 crore.
In fact, the SBI has been expressing their positive view that the RE Power, a 100 percent subsidiary has very rich assets that can get valued anywhere between USD 2.5-3 billion which they were impressing upon the promoters to merge into the Indian arm. But overall, once the debt and the funded interest will be rescheduled with a moratorium of two years, a part of the funded interest would be converted into the equity with reduction in interest rate by three percent. All that will be very positive for the stock.
We have seen that effect coming in. In fact, this news of restructuring came in last week. For whole of last week, we have seen the share under accumulation when views were expressed very positively and I gave a target of Rs 24-25 within a month or so. But this seems to have come very quickly within a week only to the expected level of Rs 24. Q: What about Tata Global Beverages and how would you react to that stock post its numbers?
A: Tata Coffee posted numbers on 25th January and even at that time, the hint was that company's going to post very good numbers.

Q: What is the problem with Tata Power? It is not a trading favourite but it has been under a lot of pressure.
A: When the JSW Energy posted their numbers last week, some hopes got revived for Tata Power as well as Adani Power. When we saw the numbers of Adani Power couple of days back, again, the hopes got dashed. The pressure of the raw material, the feed stocks is going to continue.
JSW energy must have been able to do in a better way by controlling the feed cost but that may not be possible for Tata Power as well, because they are also operating in the same space at Mundra with their ultra mega power project. So, things are not very comforting on the power generation front ahead of the numbers they are trading a little weak for Tata Power. Q: Are there any last minute short covering before the expiry because of the pressure that many of these midcaps have been through over the last 10 days?
A: The series was ruling at 160-162. A lot of put buying had happened by the informed circle of Rs 150 put and lot of call writing has happened of Rs 160. If that position has been taken by the informed circles, they will be expecting to make the shares rule below Rs 140-145 or maybe Rs 150 but this result has revived the hopes.
In fact, last month we also saw LIC sell their stake in the company, so, lot of short covering. I don't know the closing on the average basis, what it will arrive at, whether at Rs 149-148 - that’s a different case but lot of short covering is due The spill over effect will be seen in the next series.
I am expecting the next series for Tata Global at around Rs 160-162 or maybe Rs 160 plus in next one week or so because now, people will not be able to continue with their short though the options will get expired with this expiry. Apart from that, there are other few stocks like Sintex where I am expecting the short covering to happen. I have not been able to identify any other stocks except for these two counters.
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Q: A big gainer this series has been DLF, up about 23 percent and today we saw that the company sold part of its wind assets for Rs 280 crore. How much of an incremental upside would you give the DLF stock now?
A: This was the only realty stock that had not participated in the rally and have sold their 150 megawatt of the portfolio for about Rs 228 crore. So, the three asset monetisations which were indicated by the company; one of Aman Resorts and second of the National Textile Corporation (NTC) Mill plot at Mumbai of 17 acres which they sold to Lodha and third of the windmill have all been done by them in the quarter of March.
The process of the debt reduction will continue, but maybe debt reduction of Rs 4000-4500 crore will happen in FY13. But since they have launched three or four premium projects where the response is likely to be good in Gurgoan, that will also be easing their liquidity as well as the debt will start reducing. So, this whole thing can move the share to about Rs 315-320. But once it reaches to that valuations, I won’t be taking the fundamental call because still the company will be taking the projected debt reductions by FY14, they will be having a debt of Rs 18000 crore.
I don’t think that they will be able to bring it down below that. That will remain as a concern and in fact the relative valuations comparison will be made by the analyst with the Unitech which is also seen to be quite undervalued. So, maybe a target of Rs 315-320 in next one month or so can be kept for the stock but thereafter the caution is advised. Q: What is your expectation from the BHEL numbers that will be reported tomorrow?
A: I am not expecting disappointment. I have not crystallised the actual top-line and bottom-line but I am taking a sequential call. I am not taking a year-on-year call because year-on-year will have no meaning. This is because the sequential price has been reflecting in the sequential expected working. So, on a sequential basis, I don’t think that there will be any kind of disappointment by BHEL.