Why is Tulsian entering realty on correction of 3-5 %

Realty sector has posted good numbers in Q2 FY13, despite an overall weakness in the sector.SP Tulsian of sptulsian.com in an interview to CNBC-TV18 recommends HDIL, Brigade Enterprise and Prestige Estate. He however adds that due to the truncated week ahead, he will be entering the realty stocks after a correction of 3-5 percent.

Also read: Buy AB Nuvo, Indiabulls Realty, Allahabad Bank: Agarwal Below is the edited transcript of Tulsian's interview to CNBC-TV18 Q: What have you made about the latest allegations by Arvind Kejriwal against various corporates? We have seen a bit of a softness in a couple of names, whether it is Reliance Industries, ADAG, Dabur, Jet Airways. Do you see more of a reaction or is it likely to be shrugged off?
A: I do not think that the weakness is because of these allegations. It’s something like making an exposé that the politicians are corrupt, but we all know that politicians are corrupt. In the similar way if you say that the industrialists have their account in the Swiss Bank, it is a known fact that even bureaucrats and politicians have accounts in the banks.
We as alert citizens keep getting to know that x bureaucrats have this much money. However, when you get to know that they have exposed the amount of Rs 20 crore, sometimes you feel pity. So, I do not think that these things are really the reason for the corrections of the stock.
The market wanted a trigger for corrections which is a known fact. However, I do not think that anything will happen. If we keep getting these kind of revelations from Arvind Kejriwal, people will probably stop paying attention to these things. You cannot really keep on controlling the things that have already been prevalent since independence.
I do not think that the market has really been taking that as a reason for the correction of the market today. Q: What are your initial thoughts on the operational performance of Tata Steel? The stock is actually now down about 3%?
A: They are highly disappointing numbers and infact, I would like to see their standalone and consolidated. If we have PAT of less than Rs 1,200 crore on the standalone basis with top-line of less than Rs 8,000 crore, I think the disappointment will probably be on both the numbers. If you see the numbers of the company that have been being posted, the standalone has always been very stagnant. The bottom-line has been Rs 1,400-1,600 crore. Q: Tata Steel has posted Rs 1,351 crore in terms of a standalone number. That is de-growth of 10 percent on the profitability on the standalone business.
A: There is no disappointment on the standalone operations. Even in the worst case scenario, it would not have gone below Rs 1,200-1,250 crore. Rupees 1,351 crore seems to be a good number, because on a sequential basis they had Rs 1,400 crore in the Q1.
So, the entire disappointment has come from the European operations. I do not see any light at the end of the tunnel for the next three-four quarters. I don’t expect the European operations to get improved. Q: It has been three straight downticks that we have got in terms of earnings for Tata Steel, SBI, ONGC. That has pretty much dragged the index down to a 1 percent cut today. What did you make of most of these numbers? How the last leg of the earnings season has shaped up for the market?
A: I am not too much disappointed with the ONGC numbers because we all know that the subsidy sharing and all those things really play a very important role. That makes the company’s numbers go haywire.
However, I am highly disappointed by Tata Steel. If the company posts an EBITDA of anything less than Rs 2,700 crore on a standalone basis, I am unable to connect how the bottom-line has been at Rs 1,350 crore inspite of the EBITDA at such a lower level. So, the high disappointment has come first on Tata Steel followed by SBI. SBI probably can spill over to the other PSU banking stocks as well which have otherwise been holding on. So now, things will be really bad for the metal as well as the PSU banking sector. Q: What would you do with Manappuram General Finance which is down about 13% odd on the back of its numbers?
A: Those are definitely very poor numbers, but one can think of buying the stock below Rs 30. Once that happens, once the short-term trading buying interest sees getting exitted from the counter again, maybe the stock can move back quickly to about Rs 34-35. So, I will definitely be looking to enter into the stock below Rs 30. Q: A couple of PSU banks have reported a weak set of numbers in terms of the asset quality. Do you have a contra buy?
A: No, I will not be keeping any contra buys, because the kind of run up which we have seen in all the stocks; whether you talk ofPNB, Canara Bank, Bank of Baroda even Union Bank and Oriental Bank of Commerce, all have posted good numbers. Profit booking is expected in all these stocks, because SBI was the last giant in the PSU banking space and that has disappointed. That probably will be the key or the basis on which the profit booking will start coming in, in all these stocks. So, I am keeping my negative stance on all the PSU banking stocks for the next week. Q: Realty has done quite well despite the weakness that we have seen in general. So, DB Realty, Unitech, Puravankara all of them have rallied about 9-10% this entire week. Would you have any kind of a pick?
A: I am keeping my positive stance. Some stocks one can look at are- HDIL and Brigade Enterprise. These two stocks look to be quite good and maybe one can add Prestige Estate, but overall I am keeping my positive stance. However, my advice will be that since the view on the market is bit cautious to negative for the next week because of the truncated week, I will probably look to enter into these stocks may be on a correction of about 3-5%.