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Last Updated : Nov 16, 2012 08:11 AM IST | Source: CNBC-TV18

Bullish on NBFCs, not positive on telecom stocks: Tulsian

Post the Diageo- United Spirits stake deal, United Spirits stock hit a new 52-week high of Rs 1953.90 today. SP Tulsian of sptulsian.com opines that the Diageo open offer might not see any response coming in favour of the company.


Post the Diageo-United Spirits stake deal, United Spirits stock hit a new 52-week high of Rs 1,953.90 today. SP Tulsian of sptulsian.com opines that the Diageo open offer might not see any response coming in favour of the company.


Also read: Good times continue for United Spirits; stk hits new high


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


Q: What do you do with United Spirits now? The open offer price clearly is meaningless at this point. Do you see Diageo revising the open offer price soon?


A: This is a tough time for Diageo. If you take the scenario of their 90 percent stake, I have my question mark on the 10 percent preferential allotment also. It is questionable whether the shareholders of United Spirits will really allow that resolution to go through or not. If that gets stalled, then probably UB Holdings will have to sell the additional 10 percent to Diageo at Rs 1,440.


Now on the open offer, it seems to be more as compliance for having acquired a stake in the company. I don’t think the open offer will see any response coming in favour of the Diageo.


The question is, will they really be contended with a stake of maybe 23-24 percent or maybe 25 percent? On the other hand, will Vijay Mallya really extinguish or totally exit from the company? Because at present, they have 27 percent direct stake and 3 percent through the welfare trust. So, will they really be happy with a stake of 4-5 percent? 


So, considering the desperation on the part of Diageo and the way United Spirits looks, Diageo will definitely be raising their open offer price. How far, I don’t know. For instance, if they raise the open offer price to about Rs 1,800, the share shouldn’t again run up to about Rs 2,000 or so. This really has become a very tricky situation for Diageo. But taking the situation as of now, I don’t think that there is much upside in the share price beyond this. I have been advising profit-booking at the level at which it is now ruling.


Maybe the short-term traders, those who have taken the positions either in the F&O or those who have taken the delivery from a short-term angle, can definitely look to exit from the counter on every rise. I am not saying that they may look to exit today. But yes, any rise beyond Rs 1,900 should definitely be used as a profit-booking opportunity.


Q: Do you see more out-performance in telecom names like Bharti Airtel and Idea on the back of the tepid performance of the 2G auctions?


A: I am not very hopeful. Actually, all the telecom stocks are up by about 3-4 %. Infact, RComm which is not affected by this spectrum auction; even that share has gone up by about 3.5-4%. So, maybe Bharti could see a resistance at Rs 300 or so. However, I am not too positive on the telecom stocks. Maybe it’ll see a further upside of about 2-3% hereon.



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Q: What have you made of GMR Infra’s numbers?


A: Those are poor numbers. Considering the interest burden of about Rs 500 crore, I do not think that much can be expected from the company. What has been the most worrying part is that the debt has surpassed Rs 30,000 crore. The management has been very confident in saying that they will be able to control the debt beyond a point. However, I do not think that, that is happening. If you see the situation going ahead, I do not think that it is really comforting. So, there is overall discomfort on that. The power segment has been a big disappointment. Road has been a consistent performer on which they are looking to monetize their assets and exit from that business. However, power has been a big disappointment if you really go by the sequential performance. Overall, I am not too happy with the performance.


Q: Standard disclosure on this stock ofcourse, but how are you reading into the moves of Network 18? Do you expect more upside there?


A: If I take a call on TV18, the interest burden and the carriage fee will substantially come down. The kind of digitisation move which we have been seeing with four metros already over, now we will be having 36-38 cities being digitised by March 2013. Hence, an even more positive stance. If you take a call on this group, all the channels are really doing very well. They have a mix of news, business channel, entertainment and films division. Infact, all of them are doing quite well. So, I am keeping a positive view on both the stocks; TV18 as well as Network 18.


Q: What are your thoughts on DLF? The Aman Resort sale is expected in maybe 2-3 weeks time. They are planning to close the wind energy sale and the management did mention that a fresh equity issuance is on the cards in order to reduce the promoter holding. Beyond this Rs 206 level, can you justify a lot more upside?


A: If you first take a call on the whole real estate sector, there are all the reasons for the stock to move up. If you see all the real estate stocks, specially those who have a presence either in the NCR Region or in Mumbai or in Bangalore. You can take the names of 15-20 stocks which have really appreciated by 30-50 percent in the last couple of months or so.
However,  DLF has not participated in this rally. A few events are important; the sale of their 17 acre plot has come and gone. They have sold for Rs 2,700 crore. That has reduced Rs 1,500 crore debt, brought in Rs 1,200 crore, but nothing has happened that will get booked in the Q3.


I have my doubts on Aman Resorts and if they will be able to realise the desired amount. The kind of amounts, expectations, that they had and what they are talking of now, will really be very low. So, that is also going to be a big disappointment. They have been talking about the wind energy monetisations for quite sometime. So yes, the equity reduction, maybe the promoter stake reduction is a statutory compliance also. However, if your go by the performance of the company, I don’t think that there is anything to cheer about. On a comparative-basis, when you compare it with the other real estate stocks, it has all the reasons that stock to really move to about Rs 235-240 in sympathy or in-line with the moving up of other real estate stocks.


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Q: Ever since Jet Airways reported its numbers with net losses at Rs 100 crore, much lower than what the street was expecting. The stock has seen a huge run, in fact today its up about 9%, how are you placed on Jet Airways?


A: For last one month or so it has been seen more in the accumulation zone. If you really take the price range, it was moving in the range of Rs 330-360. Inspite of the dull or disappointing numbers for the September quarter, the stock held on. Infact it moved up after the numbers. So, maybe this breakout must have come in the stock which has made it to move because if you really see the performance of the airlines, again Spicejet has also disappointed on the working front for Q2. It however seems to be doing quite well and Q3 is always the best season for the airlines with the kind of fares which we have been hearing now. So, all these things probably must have given a breakout to the stock which has been seen under accumulation for quite sometime, for last 15 or 20 days.


Q: Do you see more upside on SREI Infrastructure, which has done very well ever since it came out with its numbers?


A: If you take a call on all the Non-bank financial companies (NBFC), whether you take the equipment financing, infrastructure financing, or maybe the commercial vehicle, general NBFCs – all of them have been really doing very well. If I just add the names like Bajaj Finance, Mahindra & Mahindra Financials, and IDFC. But SREI Infra has not really participated in this rally. Now that rally seems to be coming back because earlier we had some concerns on the corporate governance also. However, I think those things are now left behind and the catching up is happening in-line with the other stocks. So, I am taking a positive stance. I expect the share to take a pause or maybe the resistance at about Rs 40 where we may see the profit-booking coming in at those levels.



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First Published on Nov 15, 2012 03:42 pm
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