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Last Updated : Jun 20, 2017 04:30 PM IST | Source: CNBC-TV18

Here are SP Tulsian's top trading ideas

In an interview to CNBC-TV18's Anuj Singhal and Surabhi Upadhyay, SP Tulsian shared his views on the fundamentals of the market and specific stocks.

In an interview to CNBC-TV18's Anuj Singhal and Surabhi Upadhyay, SP Tulsian shared his views on the fundamentals of the market and specific stocks.

 Below is the verbatim transcript of the interview.

Anuj: I wanted to check if you have a view in J Kumar Infraprojects?


A: Positive view because if you see now, the company having changed their focus purely on the bridges and maybe flyovers kind of things and maybe in a social function abroad when the CMD of the company met me, I was just asking him. We were in Mauritius about a year back when I was asking him the kind of picture he has given me, Jagdish Kumar Gupta, the kind of picture he has given me, mainly in respect to, because sometimes what happens, management cannot speak openly on the channels and growth plans, but the coastal road that is of Rs 10,000 crore, though it has not yet taken off, that is number one.

Number two, if you see, the metro projects. Number three, if you see, maybe the other flyovers and all that, they have a very significant presence. I will not be able to give you the patches or in which they are operating on the metro also, maybe between Andheri to Dahisar I think they are operating or maybe between Santacruz to Andheri and all that, they have their full of orders in their place.

The only problem they had or a grey shade in the past that some kind of action for the poor quality which I think it was required because otherwise, sometimes, these companies and all that, they go complacent and they go out of way or go overboard in either procuring the orders or executing the projects in a faster pace. So that maybe seen behind.

If one wants to take that into consideration then he will be a bit cautious, but otherwise, I think they have a very core strength in their engineering, procurement and construction (EPC) execution. The two sons of the CMD, again they have taken charge. I am not saying that it is a family concern. It is a professionally managed company. They have a very good construction equipment. In fact the main strength of any EPC player is that they must have their own construction equipment which they are having.

So I am quite positive on the progress having made by this company in the last couple of years and the execution speed. If you take a call on the Bandra, Kalanagar flyover, I am just giving you some of the examples, they have executed in 30-35 days ahead and they have been earning the bonus on that. So that has been the theme which CMD also has said that they always try to earn the bonuses on the early completion of the projects.

So I am quite confident that they will be able to have the larger pie of these orders from the Mumbai city though they have presence out of Mumbai also. But their focus now seems to be having shifted more on the Mumbai city, maybe next couple of years the company will be having the focus on Mumbai city.

So I am keeping a positive view though we have not initiated any buy call, neither we have given any buy call to our clients nor I am holding any stock. But we are keeping a positive view on the stock going forward.

Surabhi: I want to draw your attention to this mega Tata Group rally of sorts that we have seen today whether it is some of the larger names like Tata Power for instance, 4-5 percent higher. Even the smaller names, some of the other companies like Tata Investment Corporation since the morning. So this entire Tata Group buzz, would you talk about what the trigger today could be? Is it that big F-16 deal? Is there something that you are still looking at buying?

A: Again if you want to take a call on Tata Power, firstly, you have to rely more on their core business that is power generation. Yes, I agree that they have a subsidiary in which they are holding the stake through National Aluminium Company (Nalco) and all that, but I will not be giving that much weightage to the Tata Power by virtue of their indirect control or holding on the deal with Lockheed Martin, the deal which the Tatas have entered into with US company for F-16. Lockheed Martin are definitely the global leader and that is seen to be quite positive.

But these defence orders and all that have been, in fact if you recall, when Nikhil Gandhi was the promoter of Pipavav Defence, he used to talk a lot of about these kind of contracts getting executed but nothing has fructified. I am not saying that Tatas are not capable, but giving some kind of positive bias on Tata Power just merely on this news.

I will not be taking that as a positive move because on the other hand, if you see, Tatas also having got tired with the ultra mega power projects at Mundra and they want to look to exit from the project which can be a failure on part of the company like Tata Power who has been into the power generation for the last 7-8 decades and if you see the power generation capacity of the company will fall virtually half. They may be having a capacity of 9,000-9,500 megwatt in a joint venture and all that excluding the recent acquisition of Welspun.

So if you take the capacity of 4,000 getting knocked off, that will definitely be seen positive. Yes, this Lockheed Martin joint venture which Tatas have entered into will be having some rub off effect because of the stake which they are holding on because Tata Power is, as I said. Nalco is a Tata Group company, are having good expertise in that because if you recall, Scorpene Submarine projects, six submarine projects at that time also, this Nalco came into limelight. So maybe because of that this stock may be moving up today, but I will not be taking a buy call on Tata Power largely because of the gloomy picture seen on their core business of power generation.

Anuj: You have in the past, maintained positive stance on some of these logistics stocks. Some of them have done well like Snowman Logistics, Gati. Thoughts here on how to approach this space from here on?

A: I have positive view still on the logistics sector, but not on all, not across the board because since you have mentioned the Snowman, they are more into the refrigerated kind of things and I agree that once the octroi checkpost will go away, you can expect at least 50 percent higher rotation of the fleets which are having, but that will largely be seen positive for the companies like VRL Logistics, Gati and Fedex kind of things or maybe Allcargo Logistics who have the sea presence also.

So keeping a mild positive, I will not be extremely positive, because the frenzy kind of things which we have seen, maybe six months back ahead of implementations of GST is not seen existing there. Now it will be a hard game of the earning growth or the volume growth which we can expect to see from these companies.

So I am not keeping a positive view on maybe the stocks like Snowman Logistics or for that matter even on the Gati, even on the Gateway Distriparks, the parent company of Snowman Logisitics. But have a positive view on maybe like Allcargo, VRL Logisitics or maybe Gati kind of stocks.

Surabhi: What is your call on Adani Enterprises? Is there more value after that dream run that we have already seen in the stock?

A: Again this investor has a one month view and we have already seen that dream run on the hopes of the revival of the Carmichael projects in Australia of USD 16-17 billion. So definitely I do not think that the further upside is seen, those projects have a what you call execution period of maybe 4-5 years. So whatever has to happen, has already seen having reflected into the share price.

So my advice is that better to exit because he has a one month view so he can book profit now and if he wish to buy again, maybe at a lower level by about 5-8 percent, he should be able to get that in the next couple of months. But as of now, he should book the profits.

Anuj: The stock that is surging now is Fortis Healthcare, up 4.5 percent right now. Thoughts on Fortis?

A: Again this IHH Healthcare takeover news is now seen imminent. That is going to see the change of hands. We will see the open offer, but ultimate, I do not think that a dramatic turnaround can really be seen happening in the financial performance of the company. No doubt that they are asset rich, they have a very good presence, but because of the fundamentals and if I compare it with the Apollo Hospitals which is not seen very expensive because the healthcare stocks are always ruling expensive and the kind of infrastructure which Apollo is enjoying that seems to be a better choice over Fortis Healthcare.

So I will not be taking a positive call on Fortis Healthcare beyond maybe Rs 205-210. And since the stock is already ruling at a level of Rs 195 or so, there is very little room left on the upside for the stock.

Anuj: We just saw the surge in Hindustan Zinc intraday. I know you have maintained a positive view on the stock. At Rs 253, is this still a buy?

A: It is a buy because let me give you the reason because in Q1, though the import parity price, because always the zinc and lead prices are derived for the domestic market on the import parity prices and with the rupee having hardened, we have seen the realisations falling by about maybe 3-5 percent for Q1, but that will get largely compensated and offset by the quantity increase because there is increase in the zinc production, there is going to be increase in the lead production as well as on the silver also.

So, yes and because of the change in the structuring from open cast to underground mining. Having gone by the company. That is giving them a lot of advantage because you do not have to bring the ore on the shaft and that saves a lot of handling cost. So that advantage also will be seen getting reflected to the company in this first quarter. Quantity increase and because of the change of this technology, as I said, maybe that will get largely offset and I do not see any reason for the shares to not perform because the kind of profit booking which you have see after the special dividend of that Rs 27-28 when it moved Rs 300 past, it has seen an ex-dividend element going out of about Rs 30-32.

But it has seen the huge beating at that point of time maybe because of the dividend planning having taken place. So keeping a positive view and will not be a surprise to see a price of Rs 270-275 in the next couple of weeks or so.
First Published on Jun 20, 2017 04:03 pm