Thermax results may not disappoint tomorrow: Tulsian

SP Tulsian of sptulsian.com, says that the results of Thermax will not disappoint but it will not be too exciting because the company has been maintaining flat numbers for last three quarters and the trend is likely to continue. In the last 15 days the stock had a good run up so some profit booking may come in and the stock may touch Rs 560.

 

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

 

Q: How will you approach Havells’ post its results?

 

A: The results are neither exciting nor too dull but on expected lines. I have been maintaining a cautious stance, the moment the stock touched Rs 600-620 level. I have a cautious view on the valuations of the company.

 

The PE multiple valuations are not very comfortable. There is unexpected trading interest and volatility.

 

The share may again touch Rs 625-630 level, once it corrects to Rs 575-580. it is a good stock for risk traders. They can enter the stock at Rs 580 and exit at Rs 630.

 

Q: What is your view on the collapse in the United Spirits and the news flow that has come in over the weekend?

A: The stocks are reacting to the news or the statement that has been made by Mallya, that he will not sell family silver to salvage Kingfisher Airlines. KFA arranging money on their own is a funny or a ridiculous statement. The upside movement in share of United Spirits and United Breweries can be seen as a balancing move. Today, United Breweries has moved up by 6-7%. Probably, the deal may not happen on the expected lines with Diageo because Mallya has in parallel kept open his talk with Heineken in case of United Breweries and Diageo in case of United Spirits.

 

In case of Heineken the valuations are much richer. If you take an expected EPS of 16 for FY13, the share is ruling at a PE multiple of close to 46-48 times and couple of months back there were news that Mallya is in talks with his joint venture or with his foreign partner to shed some of the stakes in their favour. If he sells his entire 37.5% stake he can mobilise Rs 10000 crore.
  On a fundamental basis, I don't see any reason for United Breweries share price to go up. So possible that deal may not have happened because many strategies need to be executed so Mallya must have kept the deal of United Spirits on hold and may have opened and this seems to be the move by the insider otherwise there is no reason for United Breweries to move up by 6-7-8% today.   If he has no intention to sell the family silver because family silver largely constitutes by this two stakes United Breweries 37.5% and 29% in United Spirits. A possibility of stake sale cannot be ruled out, it's just a matter of time and negotiation how fast he is able to do that.

 

 

Q: What are your view on Geometric results and the move on the stock today?

A: The numbers are bad and there is an overreaction to the share price. The correction that happened in the share price is not warranted more specially after seeing Rakesh Jhunjhunwala increasing the stake. The Q1 numbers have been quite good and even the stake sell is on the cards by the Godrej.   The trading positions or the positions, which have got created or maybe built up by the short-term investors in last 15 days is seen getting liquidated. Definitely, the numbers are poor but not as bad as to give the correction of more than 10 percent.

 

Q: What is your view on BHEL numbers?

A: The stock can fall about 2 percent. I am not too disappointed on their execution capability but the order contraction with orders of Rs 1,22,000 crore with no accretion is happening in the order book.

 

Generally, the first three quarter result area always dull and an EPS of above Rs 5 for this quarter has been on the expected lines. The concerns are on the order front where the stock can correct to Rs 200-215. But indications from Q1 show that the stock is not likely to fall below Rs 200.
Strong value buying may come in as the call remains intact for FY13 with an EPS of Rs 23-24 and maybe with some policy changes the orders starts flowing in again back maybe after 3-4 months down the line that can again make the stock to get rerated, which can again make it move to Rs 250-260.

The earlier high of Rs 275, which we saw in the last month may not be seen again in this round of volatility or in this round of ups and downs. Probably, one can take a range of about Rs 210-260 for the next 6 months.

 

Q: Thermax results are expected tomorrow, the stock is down about a percent but in general what is your expectation this time around?

A: I think the results of Thermax will not disappoint but it will not be too exciting because the company has been maintaining flat numbers for last three quarters and the trend is likely to continue. In the last 15 days the stock had a good run up so some profit booking may come in and the stock may touch Rs 560.

 

Q: Peninsula has corrected close to 5% after a phenomenal run. Should one accumulate the stock post correction or do you think that there is more downside and hence one could wait?

A: It is better to look for the other stock in the same space. The stock is likely to correct to Rs 70-72. One can enter in this stock when it touches Rs 70 but at the current level it is not advisable to buy the stock.