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Last Updated : Jan 04, 2017 11:33 AM IST | Source: CNBC-TV18

Continue to be positive on housing finance companies: SP Tulsian

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com shared his reading and outlook on the market as well as on specific stocks.


In an interview to CNBC-TV18, SP Tulsian of sptulsian.com shared his reading and outlook on the market as well as on specific stocks.

Below is the verbatim transcript of SP Tulsian's interview to Latha Venkatesh, Sonia Shenoy and Anuj Singhal on CNBC-TV18.

Latha: Let us talk about the non-banking financial companies (NBFCs) that cut their lending rates, they don’t have the advantage of cheap money but they have to compete with the banks. Will you worry about Indiabulls Housing, Dewan Housing?

A: I have just now heard Hemant Kanoria of SREI saying that the rate reduction will not be seen happening so much fast. That maybe the vested interest view but if I take a call on the NBFC, what people is mistaking is that they are thinking that the pie will not increase while that is a biggest mistake, the way things are analysed.

In fact, I have said that couple of days back also when the banks have reduced the rates because if you see the growth which we will be seeing after the subvention of having Rs 36,000 per anum having given on 4 percent on Rs 9 lakh loan and 3 percent on Rs 12 lakh loan plus the repairing or the reconstruction of the house for Rs 2 lakh. That will see the huge demand of the home loan coming in and if you see -- in the past also the home loan finance space was very much wide open for the PSU banks but the kind of approach -- which I hope they will change -- they have always gone for the wholesale lending maybe they will pick up one group, will lend Rs 5,000 crore to one group and having burnt their fingers now they have realised that this is the time to move into the retail space that is consumer durable financing, home loans, vehicle finance where the record of the PSU banks have been poor and very lethargic.

So I feel that yes, things will start widening and this interest reduction feature has been the phenomenon for the last maybe about 18 months or so. But we have always raised -- if we see that the rates are not getting reduced, we start worrying that credit growth will not come. If we see the interest rate getting reduced, we start worrying on the net interest margins (NIMs), the companies will see the shrinkage of the NIMs and all that but I am keeping a highly positive view and in fact, I have expressed that earlier that if you take an average ticket size of any housing finance company, Dewan Housing has the lowest ticket size of about Rs 12-13 lakh followed by LIC Housing but overall I am quite positive because I expect the huge explosion in credit growth to be seen in the housing finance space and all the companies whether you take Can Fin Homes, GIC Housing or the larger ones like LIC Housing, HDFC or maybe Dewan Housing kind of stocks, all will tend to gain, so keeping positive view on the housing finance companies.

Anuj: The other stock that I wanted your thoughts on is Wockhardt because you track this stock so closely. What have you made of the overnight developments and do you think the stock has priced in most of the damages?

A: There is no point. I expressed this a couple of months back on your channel when you all broke the news that the company is likely to get the USFDA approval -- that time I had said that the two groups, one is Amtek and second is Wockhardt -- I have stopped having any kind of hopes or give any kind of timeline unless until you see the concrete developments happening. If you see this recent news maybe on yesterday at the Ankleshwar Plant, I don’t see that serious things because we have kept the positive view couple of weeks when the UK Medicines and Healthcare products Regulatory Agency (MHRA) have given the positive view or the clearance to one of their Aurangabad plants because the three plants at Aurangabad, Chikalthana, Waluj and Shendra -- they are all the crucial plants. I am not too worried on this Ankleshwar Active Pharmaceutical Ingredients (API) plant for this newsflow has come in. If you see Wockhardt is the most laggard -- I have been very hopeful but because I said that for last three-four months or six months because even the management commentary, management has stopped talking on that whenever the channel asks Khorakiwala, what is the progress, he said I don’t want to discuss on that front. So in this situation, I don’t think there is any point, this will not cause much damage. Even if any correction is seen, that will get bought in because the stock is virtually ruling at its lowest level or maybe at a support level. So I have no view neither positive nor negative at this stage and I won't give much credence to the news of US FDA which we have seen last night.

Sonia: The other stock I wanted to ask you about was MOIL, the price hikes that have come in from the company and that is the stock that you have been very bullish on lately. What is the view now?

A: Bullish view because if you see the price increase -- what I find in the MOIL is that they are announcing the prices for the quarter because if you see the trend on October 1 when they announced October to December but they have swiftly changed that again in the month of November and in the month of December and again now in the month of January, they have increased it by 10-15 percent. That means if you see post October 1, they have raised the prices almost by 60 percent and there is huge demand for manganese ore.

NMDC and MOIL both have completed the share buyback on September 30, 2016 and since then I have been giving a positive view because of this robust demand and share buyback. This MOIL is purely into the manganese ore but one amongst the private sector that is Sandur Manganese, they are into the similar space of manganese ore and the iron ore and having a long-term tie-up with the JSW Steel also for buying because they are very close to in the state of Karnataka near Bellary. So on both the stocks mainly because of this hardening of the commodity prices of manganese ore rather than iron ore because iron ore has seen a price increase of about 5 percent by NMDC while MOIL has increased by 10-15 percent. So keeping a positive stance on MOIL and Sandur Manganese both.

Latha: TVS Srichakra is outperforming the other tyre stocks.

A: About six months back I chose this stock amongst all other tyre stocks. It has risen to a level of Rs 4,500 also but post that I have started giving a profit booking call also and for the time being I am not keeping a buy call on the stock.

Sonia: Any thoughts on how to approach Godrej Properties?

A: Keeping a neutral view on that, sometimes I am quite apprehensive on these type of projects where the bookings are made though the bookings are made only for 15-20 percent of the total developable area but going by my 30 years experience in the real estate sector, I found that if you have sold your premises now at the current rate while the inflation is hitting you -- because the entire project will get completed in next three-four years and that may lend you in the shrinkage of the margin or in losses. I don’t say that the things will happen with Godrej Properties also but I am quite circumspect because they have been into the mega housing projects like in Gujarat, in Admedabad and similar case in Pune. So I am not too comfortable in fact that has been the cause for the problems for DLF, Unitech and stocks as well in the past. So I will be keeping my neutral stance on the Godrej Properties.

Latha: I wanted to ask you about the run up to the Budget and the manner in which Jain Irrigation stock is doing well -- I am not trying to connect the two -- separately it could get something from the Budget in terms of a rural push. Is that a good buy?

A: In isolation, I will take a positive call on Jain Irrigation not linking it with Budget because I have said this earlier also that if you start speculating on the Budget expectation for the agri sector, you get to select so many other stocks also. However, yes, because lately if you see because of the good kharif season, good sowing in the rabi, all these things are seen positive though the debt reduction has not seen happening on the desired level at the company's front, still the bottoming out process hasn’t taken place in the stock and the renewed buying can make the stock look good from here. But I am not connecting it with the Budget expectation.

First Published on Jan 4, 2017 09:25 am
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