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Last Updated : Nov 22, 2017 10:45 AM IST | Source: CNBC-TV18

Here are some stock trading ideas by SP Tulsian

In an interview to CNBC-TV18's Latha Venkatesh, Surabhi Upadhyay and Anuj Singhal, SP Tulsian of sptulsian.com shared his reading and outlook on the market and also gave recommendations on various stocks.

CNBC TV18 @moneycontrolcom

In an interview to CNBC-TV18's Latha Venkatesh, Surabhi Upadhyay and Anuj Singhal, SP Tulsian of sptulsian.com shared his reading and outlook on the market and also gave recommendations on various stocks.

Below is the verbatim transcript of the interview. 

Anuj: The first stock I wanted to discuss with you is Jet Airways. Your thought on the kind of correction that we had yesterday 8 percent lower was this just a case of profit taking or was it disappointment over nothing meaningful coming out of the analyst meet?

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A: I think that was just used as a trigger for profit booking because the kind of run-up which we have seen in the share price and I don’t think that the management guidance of the single digit growth is seemed to be so significant because sometimes management are cautious and in fact if you have seen the management commentary they have been forthwith of any other futuristic comment in respect to the debt reduction, induction of a partner or maybe in terms of the growth. But, because of the kind of run-up which we have seen in this last maybe couple of weeks probably this was used as a trigger for profit booking and except for that I don’t think that any kind of disappointment is seen from the con call or maybe from the management commentary.

 Latha: I also wanted to ask you about L&T Finance Holdings, basically NBFCs but there seems to be a little extra pain in the L&T Finance?

A: Again this has to be read in conjunction with a kind of rise also which we have seen maybe the stock has run up in proportion to because there are many few NBFCs having risen so much. If I really want to calculate on the fingers probably Bajaj Finance and L&T Finance, I don’t have the table of the relative growth which has been shown post demonetisation and probably these two stocks stands out in that category. Now by and large we are seeing the profit booking in NBFCs and probably because of that maybe Bajaj Finance is now ruling in a range or maybe with a subdued kind of things, while L&T Finance has seeing some kind of profit booking. But I am not disturbed, because I am keeping the positive view on the stock going forward.

 Surabhi: Moving to a different subject today and that is the goods and service tax (GST) price cuts that the government is ensuring companies pass on, your view on Fast-moving consumer goods (FMCG) stocks? Clearly, there is no margin expansion now because of the tax decrease will this volume fillip work as an additional kicker?

A: I have been saying this that GST reduction should not be implied as a margin expansion because firstly no companies will look to retain that. I am referring in case of the FMCG, large players. Second is anti- profiteering clause prevailing in the GST and it is not ethical on part of the companies or maybe the tax accesses those who have got the benefits of the rate reduction to retain that as a margin expansion because then there is no point in reducing the GST rate for the benefits of the consumers.

Coming on FMCG, yes that will definitely see as a trigger, but again one has to really look for the products. Because if you really generalise the FMCG then many of the discretionary and non-discretionary products both falls in that same category. This will definitely be seen positive overall for the sector, but not seen as the margin expansion. I think rightly, this thing percolating now down the line that GST reduction has to get passed on to the users or to the consumers ultimately.

Anuj: What about your stock recommendation, what is your stock you are backing for long-term?

 A: I have picked up Eon Electric and in fact this is the stock which was my Diwali pick. I gave at Rs 92.50 on October 12 th in our Diwali show and it moved to Rs 137.50 just in less than maybe about two weeks giving a gain of 48 percent one way post my recommendations in Diwali show and now the stock is ruling at Rs 119-120. If I just take the business profile of the company they are basically the LED light makers, where they derive their maximum profits and secondly they are making cables and wires also. Post this GST reduction on cables and wires, in fact all the cable wire companies have really started doing very well on the stock exchanges may be like Universal Cable, Vindhya Telelinks, Aksh Optifibre, Tejas Networks if I just take a – there are many players in that, in fact the fortunes of those companies are really seen changing going forward. So, maybe that is also a theme. If I just take a call that annual top line is closer to about Rs 190 crore I am taking for the completed year FY17, market cap is sub Rs 200 crore while the company is having a cash of about maybe about Rs 70 crore with them, so you are getting this company in net off cash for Rs 120 crore.

Promoters have raised their stake recently from 59 percent to 62 percent by subscribing to 8 lakhs plus shares, so that shows their confidence. If I just go on the quarter one working because I have already referred for FY17, Q1 working is also more or less maybe you can say that about 27-28 percent of FY17 in terms of topline in terms of profits. Q1 lighting segments have reported a turnover of Rs 28 crore EBIT of Rs 8.22 crore that means fabulous EBIT margin of about 30 percent while cable had an income of about Rs 6 crore while negative EBIT of about Rs 2.6 crore. This negative EBIT is seen to be falling down and I won’t be surprised to see this EBIT turning positive in FY19 if not in Q4 FY18. So, taking all in to consideration the promoter as I said book value of about Rs 75 and of that Rs 40 per share is seem to be held in cash taking all this into consideration I think stock is giving another buying opportunity even at elevated level though I recommended at Rs 92 and Rs 119 now with a target of Rs 143 in next six months or so.
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First Published on Nov 22, 2017 09:07 am
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