In an interview to CNBC-TV18, SP Tulsian of sptulsian.com shared his readings and outlook on market and specific stocks.
Below is the verbatim transcript of the interview.
Anuj: Your thoughts on Idea Cellular because that is the fresh news and in the pre-open the stock is up 10 percent?
A: This was been talked that Idea and Vodafone both will be looking to monetise their tower business and in fact ATC has been able to score over and even Bharti Infratel is seen to be quite aggressive in increasing their tower tally. So, I think this is positive and in fact for Idea and Vodafone this is a compulsion for both of them after integration now getting monetise of about Rs 8,000 crore with Rs 4,000 crore by each party seem to be the necessity because things are seen to be moving on an equal path going forward and the focus is now seen on the core business going forward. So, seen positive may be from a debt reduction point of view or maybe giving some financial relief by monetisation of this non-core assets.
Anuj: Your long-term stock bet?
A: My stock is Lakshmi Electrical Control Systems. In fact this stock was recommended by me on July 18 th at Rs 548 and it has given us a gain of about 35 percent in this last three months or maybe less than three months. After seeing the quarter two numbers, I thought of revisiting the stock and taking a renewed call and still find to see huge value existing in the stock. First if I just quickly come on H1 instead of taking quarter two numbers, if I just take the H1 numbers the earnings per share (EPS) has been at Rs 22. H2 is always better so one can safely assume that Rs 46-48 EPS will be seen for FY18, company is a consistent dividend payer. Last dividend was Rs 8. If you see the kind of improvement in their segment – electrical segment has again recouped their old kind of margins and the plastic component business has been seen doing quite well.
In the first half of FY18 EBIT has been Rs 1.61 crore which was less than about Rs 70 lakhs in the same period over the previous year. Apart from that best interesting part which company has carried out which optically looks better it doesn’t have any financial ramifications because company is holding about 90,000 shares of Lakshmi Machine 89,000 though they have not clarified in the results which have been posted, but it seems that those investments have been re-valued by the company having a book value of less than about may be Rs 100 lakhs have been revalued at a market price and Rs 50 crore got added to the reserves and surplus.
If you optically see the net worth which was at Rs 105 crore on March 31 st now is at Rs 155 crore giving a book value of Rs 500-510. As I said it is just an accounting entry because otherwise also these investments were existing in book of the company. However now the cash and cash equivalent with the company is closer to about Rs 70-75 crore against the market cap of Rs 185 crore. So, taking all this into account I think the stock still looks quite good with a target of about Rs 890 in next six months.
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