Check out: What Tulsian is betting on from realty sector

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com gives his picks from the realty space. He recommends HDIL and Peninsula from the Mumbai realty space. From realty companies based in Bangalore, Tulsian is bullish on Prestige, Brigade or Nitesh Estates.

Also read: Buy Pantaloon Retail, DB Realty, Rel Comm: Agarwal

On Kolte-Patil that has seen a rally of about 8 percent, Tulsian says he has a call of Rs 140-145 on it. "Whenever we have this swift move, you see traders or general investors entering at the fag end and they don’t have the patience. So, once they start exiting, we see some profit booking coming in. Today, we have seen the renewed buying coming back into the stock," he adds.

Below is the edited transcript of Tulsian's interview to CNBC-TV18.

Q: The broader markets are seeing some traction in some real estate names. How much more of an up side would you give them and as a trader what stocks would you pick now?

A: This up move has started since yesterday. In the late buying, Unitech, HDIL, Indiabulls moved in the late trade yesterday. I have a call of Rs 140-145 on Kolte-Patil. Whenever we have this swift move, you see traders or general investors entering at the fag end and they don’t have the patience. So, once they start exiting, we see some profit booking coming in. Today, we have seen the renewed buying coming back into the stock. So, there maybe a further up-side of Rs 5-7 from here on, but then, there will be a pause.
The stocks I am bullish on are; HDIL, Anant Raj Industries and Peninsula. Two are from the Mumbai real estate market and Anant Raj is from National Capital Region (NCR). I will keep my cool stance on Bangalore ones because Prestige, Brigade or Nitesh Estates all look reasonably priced as of now.
If one wants to pick and choose from the Bangalore space, then I will probably go with Nitesh Estates, because I still see some up-side happening there. From the Chennai market, I will recommend Vijay Shanthi that has moved from Rs 18 to Rs 25. So, there also probably a pause needs to be taken. Q: There has been big volume action on GVK Power and a brokerage upgrade as well. How are you placed on that stock?
A: I don’t see any reason for the brokerage upgrade because there is no comfort coming in for their Mumbai Airport. Since yesterday evening, after the National Highways Authority of India (NHAI) moved to the Supreme Court against environment ministry, the overall market has started taking a positive view on the road portfolio. It has taken a positive view that the companies that will be having road portfolios, may probably start seeing clearances coming in quickly.
In case of GVK Power, there has been some talk of the company looking to exit one or two road contracts on the pretext of non-availability of the permissions from the environment ministry or from NHAI and non-finalisation of the toll on the pretext on which the GMR has exited. Surrendering any kind of a contract back to NHAI should be seen positive by any company. So, there has been some positive stance building up, but I am not convinced with this kind of up-move because you have this kind of upgrade or downgrade reports coming in everyday on maybe on five to six stocks by broking houses. I don’t see any rationale for this up move or upgrade on the stock at this stage. 

Q: What have you thought of IndusInd’s Q3 performance?
A: They are very good numbers, infact, if you see on all fronts, the cost of funds has gone down by about 25 bps. Infact we have seen corresponding increase in the net interest margin (NIM) also by about 21 bps. If you see the credit growth, it has been very good at 30 percent plus with deposit growth at 25 percent plus. I don’t think that one can really expect much from the stock, but the stock will probably not have moved beyond Rs 400 in the last couple of months or so, but it is now catching with Yes Bank.
Since Yes Bank has moved to Rs 500, people take this as a proxy to Yes Bank. The thinking goes, if you can’t catch Yes Bank, then look to buy IndusInd Bank. However, if you take a call, the stock is now ruling on historic earning with a price-to-earnings multiple of close to about 18 times. If the EPS is estimated to Rs 24-25 for FY13, it is ruling at 18 or so. So, I will probably keep my pause on Yes Bank and IndusInd Bank both. For some reason, presume that Yes Bank moves from Rs 500 to Rs 550, then probably the differential will have to get narrowed down. In that case, even IndusInd Bank can move to Rs 450-460, but otherwise, as of now I think the Q3 numbers which have been very good seem to have been factored in, into the price.
_PAGEBREAK_ Q: Sintex Industries will be reporting its numbers tomorrow. What is the expectation there? There are some brokerages that have started to show concerns about the corporate governance issues that the company has. How would you approach all that newsflow?
A: I have not seen any kind of corporate governance issues which has been of concern. However, since we have seen the custom duty being levied for import of the aircraft, that  probably can be termed loosely as a matter of corporate governance. This has been very usual with all the corporates. They import the aircraft on the pretext that it will be used for the commercial purposes or for hiring purposes while it is used for the staff and officials of the company.
Coming specifically to the Q3 numbers, the company has been improving its numbers marginally on a sequential basis. So, there maybe a profit of Rs 105 crore before tax  in Q3 before forex adjustments because it is very difficult to take a call on what the forex losses are bound to be.  There are bound to be some forex losses because of the depreciation of the rupee between September 30 and December 31 quarter. Since they have their forex liability in the form of FCCB, it is very difficult to take a call on the losses. The losses will be somewhere between Rs 15-20 crore and Rs 12-13 crore if you want to take a higher range. If you take forex loss of about Rs 12-13 crore, then probably the PAT would be sub-Rs 17 crore. It is the profit before tax and before forex losses that I am expecting to be more than Rs 105 crore.

Q: What have you thought of IndusInd’s Q3 performance?
A: They are very good numbers, infact, if you see on all fronts, the cost of funds has gone down by about 25 bps. Infact we have seen corresponding increase in the net interest margin (NIM) also by about 21 bps. If you see the credit growth, it has been very good at 30 percent plus with deposit growth at 25 percent plus. I don’t think that one can really expect much from the stock, but the stock will probably not have moved beyond Rs 400 in the last couple of months or so, but it is now catching with Yes Bank.
Since Yes Bank has moved to Rs 500, people take this as a proxy to Yes Bank. The thinking goes, if you can’t catch Yes Bank, then look to buy IndusInd Bank. However, if you take a call, the stock is now ruling on historic earning with a price-to-earnings multiple of close to about 18 times. If the EPS is estimated to Rs 24-25 for FY13, it is ruling at 18 or so. So, I will probably keep my pause on Yes Bank and IndusInd Bank both. For some reason, presume that Yes Bank moves from Rs 500 to Rs 550, then probably the differential will have

Q: Any idea why Arshiya International is down 20 percent?
A: I have never been comfortable on this stock. About a year back, many of the analysts were very bullish. Infact, sometimes I placed this company in the category of Deccan Chronicle. In 2008, atleast eight to ten broking houses were bullish on Deccan Chronicle and similar was the case with Arshiya. About a year back, many of the buy calls came on this stock. I kept a cautious stance on the stock. Now, there are concerns on its financials and all that. These are like OnMobile, Zylog, Plethico Pharma, Arshiya International and Glodyne Techno stocks that one should remain away. However, generally the tendency of the people is that now that it is 20 percent lower, if it gets corrected by another 30-40 percent, then again they start dabbling in the same stock thinking that it has become a technical buy. So, maybe the technical factors may work at a lower level but on a pure fundamental basis, I am not too comfortable with the stock. Q: The news is coming in that government sources may revise diesel prices for bulk buyers. Apparently the oil companies’ diesel sales to bulk buyers, forms about 17.8 percent of the total sales. Diesel bulk sales by the companies will go ahead and cut the subsidy burden by almost about Rs 12,900 crore. So, that is some source based information coming in where the companies may revise the diesel prices for bulk buyers on a fortnightly basis. What did you make of this? This is just some comments that are coming in on the newswires at this point?
A: In my view, this seems to be a sensible move on the part of the government. If the government really wants to curtail deficit, the oil subsidy burden or the under recovery burden, then, this is the logical move because whatever consumption is being made by power, cement industries, they will have to buy diesel at the market price.
The consumption of petrol to diesel is one litre of petrol having a consumption of 4.5 litre of diesel in the country. That means 4.5 times and about 18 percent of that is used by the industrial consumer. So, even if you are able to initiate some move by which your under recovery on diesel alone can curtailed by about 18 percent, I think this is a very logical and sensible move. The earlier deliberations of staggered increase of one rupee diesel price hike for next 10 months was not seen to be practical and feasible. Q: What is your view on how the Nifty may take shape for the rest of the series given the kind of news flow that we are getting at this point?
A: Today’s news probably may be having negative effect on as well as on Friday. Monday onwards there maybe a correction. If it happens by about 50 points on Nifty, that will make the market healthy because market was seen overbought also. Quite long positions were built in this series because of the unanimous bullish call of all the people on the markets. So, there may be some weakness, but I am positive on Nifty’s performance after Monday.