Positive on Lance, Suzlon and IVRCL: Tulsian

SP Tulsian of sptulsian.com, says that going forward, he has a cautious stance on GMR. He advise investors to exit from the stock on any rally. In the same space one can buy Lanco, Suzlon, IVRCL and Nagarjuna Construction. 

Below is the edited transcript of his interview to CNBC-TV18. Q: What would you attribute today's dip to? Was it trepidation ahead of the Rajya Sabha vote tomorrow or some amount of profit booking in terms of a relief rally that we saw after the Lok Sabha vote yesterday?
A: The market is correcting because of profit booking. All retail stocks ran up much to the expected level and after that possibility of an up side is limited. Also there are some apprehensions or caution on the Rajya Sabha vote. I am hopeful that the Congress will win the vote. Q: What will happen to GMR Infrastructure now that they have lost even in the Singapore Court?
A: My view is that once the process of litigation starts then nothing sails smooth. One keeps litigating at the lower court, then Supreme Court at Singapore and then International Court of Justice and even if GMR is able to take the control or continue with the operations of the Male Airport, I do not think things will remain comfortable.
However, I am not comfortable with their airport portfolio from last one year and things are looking quite concerning. Going forward from 1st January there will be reduction in their Airport Development Fee (ADF) and User Development Fee (UDF) also for Delhi Airport. On the other hand there is no comfort from their power generation front, non-monetization of any assets and piling up of debt which now stands at Rs 32,000-33,000 crore.
Going forward, I have a cautious stance on GMR. I advise investors to exit from the stock on any rally. In the same space one can buy Lanco, Suzlon, IVRCL and Nagarjuna Construction.      Q: Do you think there will be some amount of political positioning to come from from the Bahujan Samaj Party (BSP) and that could turn in favour for the UPA?
A: This as an action replay. In Lok Sabha both Samajwadi Party and Bahujan Samaj Party were vehemently opposing the foreign direct investment (FDI) in retail, they put their point forward but at the last moment ahead of the voting them staged a walkout on the pretext that since they are not agreeing and the walkout is a symbol of their anger or anguish against the FDI in retail.
I think the same will happen because we have seen the equation or maybe the so-called quid pro quo happened with the ruling party and if any party takes the negative stance for instance SP goes against FDI in retail so that will give more mileage to BSP. So neither the SP nor BSP will take the risk to displease the Congress at this stage. Q: If the UPA government win in the Rajya Sabha how significant will be the market reaction next week?
A: The market will take it positively. If the Congress wins the RS vote tomorrow then their moral will be boosted and other Bills like Banking Amendment Bill, Companies Amendment Bill, land acquisitions bill and National Investment Board (NIB) proposals may get cleared. On the other hand, BJP will take a tough stand and they will stall any increase or passage of insurance and pension reforms. This will be negative for the market. But it will be seen as a positive in near term.   Q: Do you think that the UPA is now comfortably placed?
A: Yes, post Mayati statement to support FDI the road map is very for the Congress and the chances of getting FDI approval has increased. Q: Reliance Industries was the key contributors to the rally. Where do you see that stock headed?
A: My initial call was Rs 845 but now that target has been achieved one has to wait for the market to respond whether the profit booking comes in at those levels or not. But the next target can be taken at Rs 865. So I won't take a call beyond Rs 865 for time being. Q: What is your view on the statement that Kingfisher Airlines could be in talks with Etihad?
A: Eithad looks to be a serious player who wants to enter the Indian market. An investor banker who is working on behalf of Etihad will obviously approach all three prospective airlines that are looking to induct a strategic investor. Kingfisher has a total debt of around Rs 10,000 crore and a market cap of close to Rs 1,200-1,500 crore. If the company is made debt free then they can get a valuation of Rs 15,000 crore. On the other hand, Jet Airways has a market valuation of Rs 25,000 crore, this is enterprise value.
So definitely Etihad will look the best opportunity if Kingfisher Airlines can present them a plan that they will retire the debts on these lines and will bring down the debts to close to about Rs 3,000-3,500 crore. In my view Kingfisher Airlines looks to be the best amongst the lot whether you compare it with the SpiceJet or the Jet Airways, because the brand recall value his is highest in Kingfisher Airlines.