Tulsian picks media stocks for investments

SP Tulsian of sptulsian.com, says that he is over all quite positive on media space. He feels that Dish TV can move up to Rs 80-85 especially because the kind of digitalization moves which is now likely to gather momentum and the stock will benefit. Apart form this he hi is also positive on Hathway, DEN Network, Zee Entertainment and Sun TV.

Below is the edited transcript of his interview to CNBC-TV18. Q: The Kelkar panel today submitted a report reflecting a sense of urgency in order to discipline the government finances. What are you expecting post the monsoon session of the Parliament? Do you think that a much awaited diesel price hike will come in?
A: Next 45 days are very crucial for the government, with the upcoming state elections in Gujarat. There are some talks of a possible diesel price hike which is likely to happen.
The statement of the FM says that that the direct tax targets are very much on line and a clear refusal for further expenditure. Yesterday, there was news of 10% hike in urea price hike from the government. A number of items which will be lined up on government agenda, which may not directly be aimed to control the fiscal deficits only, but give a push to the investments. Q: We heard Anil Ambani today say that he is awaiting good market conditions for the Flag Telecom IPO, do you think that is going to be put on the back burner for a while now?
A: As of now, it is on the back burner but that statement can’t be taken seriously because the management of the company has been maintaining the same status quo for last 18 months. Prior to Flag Telecom IPO the company was banking more on the Reliance Infratel’s stake sell. Today, Anil Ambani has ruled out the Reliance Infratel IPO, but nobody has been contemplating Reliance Infratel IPO though he has categorically denied it. Similar is the case with Flag Tele. Q: What is your view on the entire media space?
A: Over all, I am quite positive on media space. Dish TV can move up to Rs 80-85 especially because the kind of digitalization moves which is now likely to gather momentum and the stock will benefit.I am also positive on Hathway, DEN Network, Zee Entertainment and Sun TV. Q: There are reports about Piramal Healthcare buying the contract manufacturing and research (CRAMS) business of Ind-Swift Laboratories. Do you see this deal probably going through and there are synergies in this deal?
A: Definitely, there are synergies because Piramals have been looking again to create their presence in the pharma space and the group has been sitting on the huge cash balances with them. Both companies, Ind-Swift Lab and Ind-Swift Ltd have been struggling and have not been able to ramp up their profitability and bad focus.
They need funds to infuse on their business, which they may get and realise by selling part of their business. Ind-Swift Lab and Ind-Swift Ltd both have been faring well today and even yesterday. Q: There are multiple problems for S Kumars and the latest one is the SFIO probe. Do you see the stock become a penny stock? 
A: There are three allegations that have been made by an individual to the SFIO which they have forwarded it to ROC for examining. First allegation is hiving off Reid & Taylor in contrary or prejudicial to the minority shareholder which I don't think that has any substance as it has been transferred to the wholly-owned subsidiary, thereafter they have sold 25.5% stake to the overseas investors for about Rs 900 crore.
Second allegation is that transactions at Brand House Retail are not happening at a arms length and third is issue of some inter-corporate loan raised by the company. So, I don't find much substance in this but these issues have been affecting the stock and it is correcting or ruling weak for last 15 days, in fact largely because of the selling by the institutional investors those who have been holding large chunk, we have seen a delivery based selling of over one crore shares.
Seeing the fundamentals and brands there are limited possibility that the it can really fall into the penny stock, but the management needs to legitimately and rightfully address all these grievances or the complaints or the apprehension whichever comes on the either with the large investors or as well as with the shareholders at large. Q: Jain Irrigation has seen a minor bounce back today after selling off quite a bit. There is a board meeting today where they will be considering fund raising close to about USD 200 million. Do you think that news will alleviate or at least provide some short-term support to Jain Irrigation?
A: I think that can provide a long-term support, not short-term because the commitment by the promoters, even they have subscribed to the warrants so that will bring in some funds and now they are talking of the fresh round of fund raising.
The main component of expenses has been the interest liability of Rs 100 crore which was reflected in the Q1 numbers which they are lowering and if they are able to raise USD 200 million that they will be able to reduce the interest liability to a great extent.
Second, once the kharif season is over and if they are able to reduce their sundry debtors of Rs 2,200-2,300 crore then that can provide big relief to the share.
From fundamental point of view, the share at Rs 60 is a bottom for this stock. I am unable to take a technical call; the stock may correct to Rs 55-56, but as an investor with time horizon of three-six months. An entry can be made in the stock with a support at Rs 60 with a view of one-three months.  Q: What is your view on EID Parry. You have been bullish on that stock for many months. Do you think the time has come to book profits or do you see more there?
A: If you take their core business, the company has a very strong presence in all the Southern states like Tamil Nadu, Karnataka, and Andhra Pradesh  where they have six-seven sugar along with a matching co-gen capacity, distillery and as I am holding a very positive view on the coming sugar season, obviously their core business will be do quite well and apart from that they are holding 65% stake in Coromandel International, which is the largest complex fertiliser maker. Again, a very positive view on that company as well and their consolidated results are likely to be quite better and valuations wise the share not expensive. So, I will probably remain invested in the stock till the level of Rs 260. Q: As a trader would it make any sense to enter into these fertiliser names because we have seen the centre contemplating a hike in urea prices for the last 1-1.5 years and whenever nothing comes through you see a sell-off in many of these fertiliser stocks. How would you approach the pocket and which stock would you pick up?
A: Definitely, that risk always remains because if the government is not increasing the urea prices obviously you see the sell-off coming in. But if you take a call on the 2 or 3 stocks – one could be the National Fertiliser because that has a very low float. So, we have been seeing a huge trader’s interest and whenever this type of news flows comes in and the stock starts moving up by about maybe 8-10% in a very short duration.
Similar is a case with RCF, again because of the low public float of maybe close to about 6-7%. But I won't be taking a positive call on the other stocks because for the simple reason even if you presume that 10% increase in the urea prices is effected, nothing will really be increasing the profitability of the company because eventually 10% increase of maybe about Rs 530 per tonne, which if the increase is given in the urea selling prices will reduce the under recovery or maybe the fertiliser subsidy burden of the government and that will not improve the profitability of the companies.

Q: What is the call now on Sintex?
A: I am keeping my positive view on Sintex because once the company makes the payment of FCCB liability of Rs 1,200-1,300 crore than that will be seen very positive by the market and then the stock can move 20-25% in short term.
Apart from that, the company has a cash accrual or the cash profit of Rs 450 crore.  On the downside, I don’t think that stock has a downside of less than Rs 50 because the price earning multiple works out at price multiple of 4.  I won't be surprised to see a price of Rs 75 by March 2013. Q: There is a very small IPO, which opens up today Thejo Engineering have you had a look at it?
A: Price band looks quite aggressive but I have not gone through the details.