Expect profit booking in Geometric: SP Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, "Considering the street talk which we have all been hearing, I don't think that Geometric shareholders will really be having the beneficial swap ratio because the swap ratio which is being talked of that may be the 42 shares of Geometric will get 10 shares of HCL Tech and if you go by the market price probably it works out to 40:10. That could be because of the reason that the due diligence has started about maybe a month back when Geometric was ruling at around Rs 150 or Rs 160.""Since then it has risen by about Rs 45-50. So, whenever the acquisition happens by any acquirer obviously market price is not the only criteria. So, they must have reached on some valuations the deal of which is likely to get announced. So, it may incorrect on part of the investors to expect exactly in the market price considered swap ratio," he added."So, my calculation or my thinking is that it may be seen slightly prejudicial for the interest of the Geometric shareholders. Once you have the swap ratio coming in the company which is getting merged into HCL Tech which always rules at a discount of may be about 6-8 percent because that whole process may take about six months or so," he said. "If you take the case of monetisation, the basic premise is that whenever company is monetising the assets, they must make a profit on those asset monetisation assets also. What is happening now, in fact, whenever in particularly in case of Jaiprakash Associates, the kind of debt burden, in fact, maybe in case of JP Associates and two or three other heavily indebted infrastructure stocks also, what we have been seeing is that if you add the interest cost having incurred by these companies those assets which are now getting monetised over a period of 2-3 years, they are not even recovering the cost also. I am talking the capitalised value of the interest as well.""Same may be seen the case here also, because the people have been talking of Rs 30,000 crore debt in the books of JP for cement business. In fact there are no clarity. Let us first understand the total debt of Rs 65,000 crore floats or applies for all the assets, whether it is power generation assets or infrastructure or maybe the Yamuna Expressway or maybe cement plants, but even if you take and if they are divesting two third of the capacity, closer to about 21.2 million tonne for may be Rs 16,000-16,500 crore, Rs 15,900 plus Rs 450 crore which is calculated plus they will be left with 10.4 million tonne capacity also. So, all these things does not add up to a value of about Rs 30,000 crore. That means they may be seeing some kind of losses getting booked in the profit and loss (PNL) account on monetisation of these assets also," he added."So, I do not think that there is any rational for going overboard on these companies or maybe like JP Associates where the monetisation is happening, because we are not seeing them getting their principles also realised. But yes, the sentimental effect always gives an indication that if you are monetising the assets, if you are going for debt reduction, market generally takes them in a positive or in a positive manner and we see some kind of upmove taking place in such stocks."If I presume that it will be a merger, one has to understand the broad contours but going by the swap ratio and taking this as a merger move by HCL Tech of Geometric, I think it will be seen negative for the Geometric shareholders and profit booking may be seen tomorrow once this broad contours of the deals are announced."