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Last Updated : Nov 15, 2017 10:54 AM IST | Source: CNBC-TV18

Here are fundamental trading ideas from SP Tulsian

In an interview to CNBC-TV18's Latha Venkatesh, Anuj Singhal, and Surabhi Upadhyay, SP Tulsian of sptulsian.com shared his readings and outlook on market and specific stocks and sectors.

CNBC TV18 @moneycontrolcom

In an interview to CNBC-TV18's Latha Venkatesh, Anuj Singhal, and Surabhi Upadhyay, SP Tulsian of sptulsian.com shared his readings and outlook on market and specific stocks and sectors.

Below is the verbatim transcript of the interview.

Latha: First up, Sun Pharmaceutical, is that likely to be the stock of the morning? Did the results impress you?

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A: The results are seen better; I won’t say that that has really impressed, but looking to the results having declared so far, whether Cadila Healthcare or Aurobindo Pharma, the market is not seen to be in mood to buy the pharmaceutical stocks. Same thing may happen with Sun Pharmaceutical. You have just seen a small tip of the iceberg where the margins have seen improved, maybe touching to 20 percent kind of things. However, I don’t think that that is really the respite for the stock to really move up from here looking to the market sentiments which is not existing for the pharmaceutical stocks.

Anuj: What are your thoughts on both, Divis Laboratories and Fortis Healthcare?

A: Divis Laboratories has been on our buying list along with Aurobindo Pharma and Glenmark. We are only keeping view on these three pharmaceutical stocks. However, I think that all the positives seem to have factored in into Divis Laboratories and seen to be more in the momentum. So it is looking risky because when the stock has recommended at a level of about Rs 800 a month back or a couple of months and you see it moving towards Rs 1,100, definitely you tempt to go for the profit booking in the sector which is not very much fancied.

Coming on Fortis, naturally the news flow is not seen very positive, but the share also seems to have bottomed out. Maybe the long term investors can take a call on that stock.

Latha: There were a bunch of numbers that have come out over the last few days because of it being the end of the earnings season. Is there anything that stood out for you?

A: If I just focus on the results which have come out since yesterday after the market having closed, I am excited to see many of the excellent numbers, or many of the good numbers. If I just quickly go through, there could be MOIL, Ashiana Housing, ELGI Equipment, ZF Steering, Vindhya Telelink, Prime Focus, Banco Products, Honeywell, Ceat. In fact I am not going into the well-researched stocks which have already been discussed like Bank of Baroda, GAIL, or Sun Pharmaceutical kind of stocks.

So there are many stocks, and even if I add like maybe Voltamp, because you need to take a QoQ call. If you go for the YoY, then probably you will get disappointed and similar is the case with LEEL Electrical. So there are many stocks which have really seen having posted good numbers post 3:30pm yesterday and that is right that now the results season is behind us, only those who have been switching to the IND-AS standards will be declaring results till December 14.

Surabhi: What is your stock for the morning, the long term idea?

A: The stock which I have chosen today is Dynemic Products and this is the stock after having recommended, in fact seeing the Q2 numbers which came out day before, and in fact this was a stock having recommended by us on August 1 ahead of the Q1 numbers taking the call that for whole of FY18 the results are seen to be quite good of the company and the stand got vindicated.

Post our August 1 recommendation, when we recommended the stock at Rs 130, it has given a gain of 47 percent in about three months or maybe three and a half months and we still maintain a positive view for the simple reason that if I just go by the H1 numbers, H1 PAT has been at about Rs 7.73 crore translating into an EPS of Rs 6.60 against Rs 5 for the similar period of the previous year. If I break this Rs 6.60 EPS into two parts, EPS for Q2 has been closer to about Rs 4 and for Q1 it has been at about Rs 2.6. So that means it is on an upward trajectory.

If I just go on the business model of the company, it is a USFDA compliant food colour and lake colours makers which are used in the bakery, dairy products, cosmetics, personal care, confectionary, beverages, all sort of things. Company is having two plants at Ankleshwar on an area of about 2.5 lakh square feet and mind it I have said that it is a USFDA compliant plant.

If you take a call on the financials of the company, book value is at Rs 75. It is a debt free company and ruling at a P/E multiple of about 13 because I am expecting an EPS of at least Rs 15 for FY18. If I compare the comparable peers, in fact there are few unlisted space peers that are available, but if I compare with listed peers, there is Vidhi Specialty which is ruling at a P/E multiple of 24 against this stock ruling at a P/E multiple of 13 and both having almost similar kind of bottomline; maybe Vidhi has a higher topline but that maybe because of the trading turnover also; so bottomline is material.

So, taking that also into consideration with half valuations virtually available, the share can move to a level of Rs 230 in next six months or so.

For full interview, watch accompanying video...

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First Published on Nov 15, 2017 09:59 am
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