Positive on Tata Coffee, Coromandel, EID Parry: Tulsian

SP Tulsian of sptulsian.com, says that the result of Coromandel is good. Good margin was expected for the company due to better off take. In the Starbucks 50-50 joint venture, the major benefit has flown to Tata Global which ultimately is the holding company of Tata Coffee, the kind of run up should have been more in the case of Tata Coffee.

Below is the edited transcript of his interview to CNBC-TV18. Q: What is your view on Coromandel and how would you approach the stock now?
A: The results are very good. Due to better off take and margins this type of performance was expected. The company has been very prudent in cutting down their raw material costs by having a long term contracts in the overseas market as both raw material like phosphate and phosphorous are imported. Control over procurement of raw materials is clearly reflecting into better numbers. This result will have a positive rub off effect on EID Parry as it is holding 65 percent share in Coromandel. On consolidated basis, even EID Parry will project good numbers. Therefore it is positive for both the stocks. Q: What is your view on HDFC post its numbers?
A: HDFC is a company which has been consistently maintaining their performance. They have maintained their spread which has been constant. HDFC has shown a growth of 18 percent. They have presented consolidated financial numbers on the top-line and bottom-line. Overall their numbers are good.
Some profit booking must have come in. The stock has been ruling in a very tight range of Rs 740-760, since last 15 days post stock sale by institutional holders. The share can again move in the range of Rs 770-775 by next week. Even to get a rise of about Rs 30-35 in this stock in a series is good. I expect a price target of Rs 770-775 in November series. Q: What is your view on the core numbers posted by L&T? Will they be able to deliver FY13 order inflow guidance that they had started off with? How much more of an upside can you justify above Rs 1,670 level?
A: There should not be any complaint after looking at the current numbers. Apart from electrical & electronics and machine building products they have been showing good performance in their main E&C segment. The order inflow of above Rs 20,600 crore itself shows that they are above expectation.
The Q1 numbers are also quite satisfying. In the Q1 the kicker was more on account of order inflows which has been received by the company, but This time they have met on the expectations both on the financial performance as well as on the order inflow. I company will not find it difficult to meet FY13 guidance. The share can move in the range of Rs 1,750 in next 10 days. Q: What is your expectation from Hero MotoCorp? How would you be positioned between Bajaj and Hero Moto now?
A: The expectations are a bit dull for Hero Moto. The competition from Honda has been a problem for Bajaj and Hero Moto. I would suggest an investor to long on Bajaj Auto rather than Hero Moto. Q: What is your expectation on Cairn India?
A: There has been a marginal increase in the production in Q2 because if you take the barrel oil equivalent production per day of about 2 lakh 7 thousand , that gives an EBIT earning before interest and tax of close to about Rs 3000 crore. I expect that to be marginally +/- Rs 50 crore at about Rs 3000 crore. So, lets see, it is very difficult to take a call because they have a huge MAT credit entitlement also. So, I won't be able to take a call on the PAT unless and until you know the exact whether the MAT credit has been exhausted by the company or not. Taking that I am expecting – because and again you can say that since this is almost a debt free company there is no question of any tax element, any interest element also. So, one can expect a PBT of close to about Rs 3000 crore for the quarter. Q: Do you think that there is any material impact on the operational performance for ITC if they do go ahead and launch this segment?
A: This will give them a little higher market share. I will be happy if they reduce the size further to about 50 mm, so, at least people can just have the taste of the smoke and then curtail it much beyond that. The company must have initiated such a move after doing a good market research; this move will give them a market edge or increase in market share. One has to wait whether the other competitors also follow suit and start introducing same length of cigarettes in the market. Q: There was a launch of Starbucks store which was extremely hyped up a couple of days ago. What is your expectation from Tata Coffee and Tata Global Beverages?
A: Unless and until, Eight O'Clock which is the US subsidiary of Tata Coffee improve their performance, I do not think that the result of Tata Coffee can take a boost. There is no complaint in their domestic operations and they are doing very well.
In the Starbucks 50-50 joint venture the major benefit has flown to the Tata Global which ultimately is the holding company of Tata Coffee, because Tata Coffee is the subsidiary of Tata Global, the kind of run up should have been more in the case of Tata Coffee as well, because if there is better off take, better product lifting by this JV. Tata Coffee will also stand to gain, but I am keeping my close watch on the performance of the US subsidiary of Eight O'Clock Coffee and if that starts happening that can really improve the performances maybe by 50 percent in one shot, maybe in one quarter or so. So that is the real kicker for the performance going forward, but overall positive view on the Tata Coffee even at the current price.