Here are a few stock ideas by SP Tulsian

Coming specifically on Jet Airways, I think very bad numbers. If you see two things, one is fuel expenses, and second is the employee cost, these two things have taken a toll on the operating profit which has seen at Rs 40 crore; abysmally low figure because of the increase in the fuel cost by about Rs 170 crore and because of increase in the employee cost by about Rs 70-80 crore. So, again big disappointment from Jet Airways numbers.

Sonia: The other stock that you have been positive on for a while is MOIL and good numbers coming in from there this quarter. For somebody who has perhaps missed out on this, is it still a good buy here?

A: You are right that we have been keeping a positive view on MOIL, but again I will give you here the comparative analysis. If you see two companies, Sandur Manganese and second Manganese Ore India i.e. MOIL, both have posted the numbers yesterday. If you see Sandur Manganese, way ahead of the numbers on a sequential basis also. Even if I take a year-on-year (YoY) call also, I think Sandur has shown a six time increase in FY17 while MOIL has shown an increase of just 100 percent i.e. EPS of Rs 10 in FY16 to EPS of Rs 20. However, if I take a call even on a sequential basis, I don’t think that MOIL has really cheered, but Sandur Manganese has shown 5-6 times increase on a sequential basis also.

So, I agree that the MOIL number has been good, but that has to be seen in context to numbers having posted by Sandur Manganese also which are way ahead. The way situations are prevailing here on the ground because of the fall in the commodity prices, whether you talk of iron ore or whether you talk of manganese ore, street has been taking a cautious view. However, I have a different view because here if you see the Indian scenario, whether you take iron ore or you take the manganese ore, they are not import parity price.

Situation may be different for Indian Metal and Ferro Alloy kind of stock where they derive the price of the raw material on the import parity price. However, that is not the case here in case of MOIL or maybe Sandur Manganese. So, both the results are good, but I am highly impressed with Sandur Manganese vis-à-vis MOIL both companies being in the same product line.

Anuj: Glenmark is one of your favourite names in the pharmaceutical space. Do you get a sense that the sector has bottomed out and one could selectively start buying?

A: I don’t think that sector has bottomed out but if you need to take reluctantly a call inspite of having a negative view on the sector per se that too on the large pharmaceutical stocks, you reluctantly take a call on maybe best amongst the weakest. I have been taking that call on Aurobindo Pharma and Glenmark because that is what I have been expressing my view for quite some time for last maybe couple or so.

So, though the disappointment and huge price correction has been seen in case of Glenmark, but I am keeping my positive stance. So, I won’t be saying that I am a willing buyer in the pharmaceutical stocks, but if you are compulsive buyer and if you need to go for the larger pharmaceutical space, then probably these two are looking good buys i.e. Glenmark and Aurobindo Pharma.

Latha: Did you take a look at the hospital stocks, especially Apollo Hospitals. The numbers were under the weather, of course they had a lot of problems, they had one VIP and that must have denied them a lot of space to have other clients, as well there was a cyclone issue. What is the call on Apollo Hospitals at this point?

A: I am keeping highly positive view on Apollo Hospitals. I agree that and yes, you have rightly put the things that because of those couple of issues the company faced, but I don’t think you generally see getting disappointment from the Apollo Hospital results and same thing happened here also.

If you need to knock this off, these two things, then probably I don’t think there is any kind of disappointment because if you see in the hospital space, the healthcare space, where a lot of opportunities existing, I don’t think that any comparable peer have even been able to reach to the levels of -- I am not saying almost in terms of capacity, but in terms of operating profits and all that, market is going to be seen quite gung-ho on this sector of healthcare.

However, no company has really been able to satisfy because people have been finding this as a comparable peer or alternative in Fortis Healthcare, but even that has not pleased the market. So, amongst the healthcare space, you have no choice but to go with Apollo Hospital. However, yes, I am not disappointed with the numbers of the company.

Sonia: One more quick comment from your end on Thermax’s number because this time around it was a good set, the EBITDA went up almost 15 percent or so, but did it convince you and would you be buying here?

A: If you see the operating numbers of the company on a consolidated basis, the numbers are really looking very good. However, what has really bothered me, the Rs 68 crore loss of the jointly controlled company and that has taken away the total sheen out of Q4. However, Thermax is also seen to be a stock like that of Apollo Hospital.

If you analyse the Q4 numbers in this context, then operating profits are looking really very good, up by about maybe on a sequential basis by about 15 percent but that Rs 65-68 crore which I have said of the losses of the jointly controlled company, management needs to clarify that what kind of losses these are and whether they are of the recurring nature. However, I think the numbers are really quite good.

Anuj: What about Reliance Communications, interesting stuff happening there? Yesterday we saw that intraday chart, there was quite a bit of recovery. Now the stock is in F&O ban, what next for this stock?

A: I will confine myself purely on the fundamental basis because I am not going by the daily intraday movement and the kind of recovery yesterday which we have seen that the post management having said that September 30 is the deadline where Rs 25,000 crore will get reduced on debt front. Firstly there is a lot of confusion and in fact it is sad to read the reports in the newspaper or amongst the media that company is selling 51 percent stake in the tower business. That is totally wrong, the company is selling 100 percent interest in tower business for Rs 12,000-13,000 crore to Brookfield and only 49 percent of the economic interest and one does not know whether that economic interest will accrue and exist after couple of years or not. So, that is one thing.

Number two, to say that Rs 20,000 or Rs 14,000 crore debt is going to be Aircel joint venture and hence the company has become debt free, it is like shutting your own eyes and don’t want to see the negatives because that is just going to joint venture company in which again on a consolidated basis you are going to have the burden. In fact take the situation of Aircel joint venture, Rs 14,000 crore debt going from this company, Rs 14,000 crore debt coming in of the Aircel, Rs 28,000 crore whether amongst the current situation, can the joint company sustain the burden of Rs 28,000 crore? So, you are in fact exposing the existing Rs 14,000 crore also to the more vulnerability.

So, merely, unless and until I see on ground because you have not seen any kind of, there have been if you jot down the announcements having made by Reliance Communications, I am not referring the group, for the last four years there have been all kinds of assurances of debt reduction but nothing has happened. So, unless and until I see on ground, at least of this Rs 11,000-12,000 crore coming in from Brookfield, even by September 30 and then getting that reduced, then only I can take a call because on a Aircel joint venture I am keeping my apprehension alive because of these joint venture and Rs 14,000 crore debt getting transferred as well.

Latha: Let me give you more of a blank cheque kind of question. There were a bunch of numbers that came out yesterday, is there any of the midcaps that stood out for you?

A: There are many midcaps which have stood out and since you are giving me the blank cheque, even that blank cheque will be finding short of money. Just to start with maybe Sharda Motor, excellent numbers; if you see the performance, Rs 33 EPS against -- Rs 96 EPS for the whole of FY17. Second is Delta Corp having converted from Rs 60 crore debt to Rs 60 crore plus and their table positioning that is the gaming tables capacity will increase from 1,700 crore to 3,000 crore.

Even I am not disappointed with Lloyd Electric because the kind of special dividend they have declared, 20 percent, and the package air conditioning and the heat exchanger business which they will continue, will be giving very good numbers. So these are few of the midcap or maybe smallcap stocks which have really posted very good numbers on a selective basis.

Latha: I did not know how to understand Delta Corp, I thought since they posted a lower profit, this quarter was not one of their best of quarters. How would you analyse their numbers a little more?

A: Actually you have to see that Daman Casino which has a table position of about 1,200 and that will get the permission. Firstly as I said, I am not going by even if you see the gaming EBIT, that has not disappointed, it is about Rs 33-34 crore against the Rs 31-32 crore of same period. If you take the position, they have five casinos, three offshore and two onshore. This onshore casino will get added now maybe in the near term in Daman and that will really be seen a booster.

As I said, company is now having Rs 60 crore surplus cash, the company has virtually become debt free. So, increasing the table positions from 1,700 to 3,000, that will be seen a big kicker. So, purely on Q4 numbers if you see, then I will call them as flat results except on the debt reduction on turning out to be a cash rich company but the developments which has happened is giving a buy call in the stock.