Positive on OnMobile and metal stocks: Tulsian

SP Tulsian of sptulsian.com, says that after the change in management of OnMobile and considering the financials he is positive on the stock. He is also positive on select metal stocks.

Below is the edited transcript of his interview to CNBC-TV18.

Q: What is your view about the rally that we saw in our markets today? Is it because of the fiscal cliff and the overhang that’s removed and can we see further upside now?

A: I don't think that we have been seeing any problem for our market. Apart from Tuesday's rally we have been trading very cautious ahead of the fiscal cliff concerns for over a week. The was assumption that if nothing is materilised or no deal is reached then there will be a knee-jerk reaction so people were not creating or building up long positions.

Since that issue has been put behind for the time being so we saw renewed interest coming in into our market. I maintain my positive view on January series in spite of fiscal cliff uncertainty. My advice is to buy and remain long.

The affect of fiscal cliff is directly reflected into the rate sensitives like bank stocks, real estate, capital goods, automobiles and metals – all of them are doing quite well. Broadly, we can see effect of the fiscal cliff relief coming in.

Q: In a scenario where there could be better opportunities in the market do you think one should put their money in metals or do you think metals will come back to the forefront?

A: It is a matter of choice. Obviously, traders and investors both will look for ideas wherever they see opportunities and metals also gets added in that category. Now, one doesn't have confidence in the defensives like FMCG or IT. One has to be a risk taker in this market. Metal stocks both in ferrous or non-ferrous space is providing good buying opportunities and many are taking positions in this space.

Q: What is your view on OnMobile Global as a stock?

A: This stock corrected some couple of months back and there was a change in management since then I have been maintaining my positive stance. This stock is gaining some interest since last couple of days. The stock today is up by about 10 percent. I think the financials of the company will improve going forward. This is a good stock for investors who have a view of six months.  

Q: How would you read the rally in the entire high beta stocks, any stocks which you would like to take positions in?

A: I have an individual call on some high beta stocks and stocks in metal space. I have a positive stance on Strides Arcolab, Wockhardt, United Spirits maybe Apollo Hospitals Enterprises, BF Utility, Reliance Infrastructure and Reliance Capital, in fact they look quite good. Since the view for whole of January series is positive so one can look to trade on the long side in all these stocks.

Q: What is your view on Sintex?

A: I have been maintaining my positive view on the stock from last 3-4 months. The company has a cash accrual of about Rs 300-400 crore on an annual basis even after knocking off the dividend. The company is making quarterly cash profit of over Rs 100 crore.

If we add profit after tax (PAT) of Rs 60-70 crore and depreciation of Rs 30-35 crore.  So, I don't think that repayment of foreign currency convertible bonds (FCCBs) falling due on 13th March for USD 250 million will be an issue. They have raised around USD 170 million via fresh FCCB coupled with the Qualified Institutional Placement (QIP) to may repayment.

I think now the stock is on a growth trajectory and one can expect earnings per share (EPS) of about Rs 10 plus for FY14. I expect the share to move to about Rs 85-90 by maybe April end or middle of May.

Q: Any view with regards to Reliance Infrastructure at Rs 543, it has pretty much been at this level since quite a long time. What would you see in terms of fundamental triggers for this stock?

A: The stock has been seen under accumulation maybe for last one month. The same applies for Reliance Capital also. I am expecting that breakout to happen in Reliance Capital which can take Reliance Capital to move to Rs 530 and Reliance Infra to Rs 590 to Rs 600. So both the stocks have been holding the levels and have been seen under accumulation for quite some time. So maybe the breakout has come today.

Q: What have you heard with regards to Etihad and what's happening in terms of whether they go towards Jet or they lean towards even Spice Jet and would you have an upside bias on Jet Airways now?

A: The developments indicate that Eithad is quite keen with Kingfisher Airlines (KFA) and I think it is because of valuation. The enterprise value of KFA is around Rs 15000-16000 crore. In case of Jet it is around Rs 23000-24000 crore as the debt position is quite high at Rs 13000 crore. We have not seen any headway being made by the promoters of Kingfisher – UB Group either with respect to giving of revival plan to the DCGA or to the banks.

KFA requires around Rs 3500-5000 crore to pay its bankers to ask for restructuring. Once this happens then Eithad will take interest in the airlines. KFA has high brand value and it they start operations then it will be easy for them to capture the market share of close to 15 percent. I am quite confident that the inclination of Eithad will be more on KFA but till then I’ll keep my positive stance on both the stocks.

Q: On the subject of multi-baggers Kolte Patil has had a phenomenal run this year. The management has lined out an aggressive guidance of Rs 600-crore revenue in FY13 and Rs 1,000 crore in FY14. What is your view on the fundamentals of the company?

A: In last 30-45 days the stock saw a good run up. I don't have confidence in projections of real estate companies they at time move in different terrain. The company is doing quality development where realizations are higher. They are targeting a higher market share in Pune belt. At these levels the share should take a pause Rs 150. the stock can touch Rs 150 in next 6-12 months. However, one cannot expect anything beyond that price in whole of 2013.  

Q: Which stocks would you pick in the cement space at this point either from the frontliners or from the broader markets?

A: In the frontline, I would pick Associated Cement Companies (ACC) and Ultratech Cement. Again the stocks have seen a good run up but still I feel that the upside is quite good from hereon from these levels. In the smaller space I have a positive call on Century Textile, Dalmia Bharat Enterprise, Binani Cement or Binani Zinc.

In Binani Cement, the promoters are looking to divest their 40 percent stake and once that happens because some indications will start coming in, in the next couple of months in respect to the valuations. That can make the stock to move up. If you take JP Associates as a cement play, though it is a combination of infrastructure, real estate and cement, I have a positive stance on this stock as well.

Q: What is your view on the auto sales numbers which came till now, Mahindra & Mahindra (M&M) and TVS Motors?

A: The numbers of TVS Motors are disappointment but things are on expected line for M&M or they are flat numbers.

Q: Any view on how exactly we could possibly pan out for the rest of the week in terms of cues that we should watch out for, for the markets?

A: I have a positive view. I expect the market to remain bullish for the first half, maybe till middle of January so I have a target on the Nifty target of 6,100-6,150. So whole of this week seems to be quite positive because hereafter also we will see some positive effect coming in because of the rise in the global market, so maybe 2-3 days the positive upmove. We may have to be little cautious on Friday where we may see some mild profit booking coming in.