In an interview to CNBC-TV18’s Sonia Shenoy and Surabhi Upadhyay, SP Tulsian of sptulsian.com shared his views on the market outlook and specific stocks and sectors.
Below is the verbatim transcript of the interview.
Sonia: We were discussing this whole transformer space and you were telling us how bullish you are. Anything else in the market that looks good at this point. I know you have been talking about many spaces, but right now it looks like there is still a lot of opportunity to fish for good stocks?
A: That is right, in fact we have still many opportunities seen in this transformers space and in fact yesterday I have given six-seven names. However, if you want me to pick two or three names in that, probably I will still go with maybe CG Power number one, second is Bharat Bijlee, and third is GE T&D because if you see the kind of run up which we have seen in the share price of Voltamp Transformer or maybe Shilchar Technologies or maybe Transformers and Rectifiers, I think we have not seen the commensurate run in these three stocks.
GE T&D is into the upper end of the or maybe high capacity transformers, it is a GE company with 75 percent stake held by GE. If you see, virtually even today, even now the stock is ruling maybe not 52 week low but closer to or maybe 15-20 percent higher than 52 week low. Similar is the story with Bharat Bijlee. We have seen the stock having moved up in this last couple of months by about 25 percent. However, if you see their transformer and the presence in the other spaces, that is really immense.
Third is which I have said is that amongst the transformer space is CG Power because we have already seen that B2B automation deal having happened and company has become virtually debt free because company has just intimated on March 7 that they have signed the deal but the financials have not been revealed on an explicit way.
So, once they will be out with their Q4 numbers, it will get to know that company is virtually becoming debt free even on a consolidated basis, maybe with a debt of Rs 200-300 crore. Once they will be out with T&D business also which can fetch them about Rs 800 crore plus, it will be a cash rich company and their domestic businesses are really doing quite well. If you see on the equity market cap, turnover market cap ratio also, things are looking quite positive.
So, I think if you are specifically focusing on transformers space, these three stocks are still having good upside from here on.
Surabhi: What are your thoughts on how you would look at IT given that that is the big talking point and just your overall reading of the Infosys commentary, the fact that the numbers were extremely weak, of course in the morning the fact that they were giving out money to the shareholders that was a bit of distraction but how do you read the core picture as far as the business goes and their extremely subdued cautious outlook for the next year?
A: If I bifurcate the results and the commentary, I don't think that now at Rs 925 there seems to be much downside on the stock. However, if you are a compulsive investor into the IT stocks, if you want to have the balancing of the portfolio where you want very safe and sound stocks, then only probably you can go in IT because I have been repeatedly saying that two concerns on the IT that is of the weak rupee and the visa issue. I don't think that those are going to get resolved in the near term, maybe in the next couple of months also.
So, whenever we will see the rupee strengthening or whenever we will see this visa issue being raised on the US front, that will keep bothering the stock. So, maybe that is what I have said that I am not disappointed with the numbers because Q4 numbers were broadly on the expected lines. The distribution policy of Rs 13,000 crore has seen little positive, at least some stand has been taken by the company in respect top distribution of the profits also. So, these things are positive but as I said that maybe Rs 925 seems to have bottomed out, but if you are a compulsive investor in IT stocks then only look to go for it otherwise avoid this sector altogether.
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