Bullish on Cement, Hero MotoCorp, Bajaj FinServ: SP Tulsian

On Fiday, the Indian market closed on a positive note with the Nifty gaining 25 points to close at 6064 and the Sensex gaining 75 points to close at 20039. The market rallied after government raised the diesel price by 45 paise rallying the stocks for oil and marketing companies (OMCs) for the second consecutive day.

The cement stocks though had a correction with ACC down 1.19 percent to close at Rs 1345 and Ultratech down 0.04 percent to close at Rs 1910. In an interview to CNBC-TV18, SP Tulsian of sptulsian.com says that he is bullish on cement sector after the diesel price hike affected by the companies indicate that the pricing power remains with the companies due to the robust demand.
Further Tulsian recommends buying Hero MotoCorp due to immediate correction because of the disappointing numbers by the company. “We have seen a correction on Friday itself. Same trend was visible for Q2 numbers also where it corrected and then immediately bounced back. The bounce back or the loyalty of the investors is very high and therefore I am giving a buy call on Hero Moto,” adds Tulsian Below is an edited transcript of SP Tulsian’s interview on CNBC-TV18 Q: What would be the most crucial event to watch out next week and hence the sectors on your radar?
A: Two things. One will be the cement sector, because the price hike will be affected by the companies and that indicates that the pricing power remains with the companies due to the robust demand and that will be the crucial factor to watch. This is because the bulk user diesel sell is going to increase their cost of production and will try to offset that without losing anything.
Second will be continuing focus on the results, because we have seen the volatility or maybe the directions of a stock getting changed today. We have seen that happening last week with respect to Wipro, stocks like Exide on the negative side, results will be the key factor. So two things needed to be watched, cement sector and the results. Also Read: Diesel hike to hurt sales; see 6-7% growth rate: Hyundai Q: You have Hero MotoCorp on your list. That disappointed a lot in terms of earnings performance. Is this a contrarian buy? Can you name a few other stocks that you would recommend a buy on as we head into the new week?
A: That is right. It can be termed as a contrarian call and if you see the differential having moved between Bajaj Auto and HeroMoto is now more than Rs 300 and the correction happens immediately. You see the acid reaction coming in because of the poor numbers having posted by Hero Moto.
We have seen that correction on Friday itself. Same trend was visible for Q2 numbers also where it corrected and then immediately bounced back, because both the two wheeler stocks are robust. The bounce back or the loyalty of the investors is very high and therefore I am giving a buy call on Hero Moto.
I will be very watchful on the cement sector, so you have to remain with the leader. In terms of the capacity you have two names, one is ACC and second is Ultratech. I have chosen ACC having corrected to sub Rs 1,350 and I am expecting the share to move back to about Rs 1,410-1,415 this week. So that is the second stock.
Third stock is Bajaj FinServ from the Non-Banking Financial Companies (NBFC) space. Its 62 percent subsidiary that is Bajaj Finance has posted robust Q3 numbers with earnings per share (EPS) of close to Rs 38-39 and the growth they are posting YoY and QoQ.
Bajaj FinServ is an investment or a holding company, so you need to watch the performance of its subsidiary that is one of NBFC and second is of the insurance arm and both of them have been doing well. That has been reflected into the bottom-line of Bajaj FinServ also for Q3 with Profit After Tax (PAT) at Rs 250 crore. So, that share can move to Rs 920-925 in next one week or so.