In an interview to CNBC-TV18's Surabhi Upadhyay and Anuj Singhal, SP Tulsian of sptulsian.com shared his views and outlook on the fundamentals of the market and specific stocks.
Below is the verbatim transcript of the interview.
Surabhi: If we can start by getting your sense on today's midcap market action, do you think the worst of the pain is maybe somewhat behind us because now we are getting in some commentary from our Delhi colleagues suggesting that maybe these companies will be allowed to trade if the can offer a satisfactory explanation to SEBI, so should we start hoping that the worst of it is over?
A: We have discussed this yesterday also in the afternoon show when I have said that you do not see substance or reason for removal of the names of more than about 8-10 companies. And whatever reports which are coming in here from your bureau chiefs and all that, that about one dozen, about 12 companies are seen having identified.
And yesterday, if you try to stretch your this one which I have done or from the list, which is with us of 331, there are no reasons, I do not think that there will be any kind of substance or explanations being given by more than 300 companies. So yes, there is a valid case and yesterday also, I have said that this is just a matter of time because there are about 7-8 companies which are having substance and in fact I have given yesterday an example of Prakash Industries, you cannot expect these companies to put into the category of shell companies.
And if you really see the situation, suppose if the situation would have prevailed like that then practically these 7, 8 or maybe 12 companies would have remained suspended for ever because once you have the first month of trading and that too in the trade-to-trade (T2T) category, on that day you will find all these companies I am referring, those are having substance.
Again, mind it, I am using the word that having or are not seen shell companies will not get traded because on that Monday it will remain at lower circuit, there will be no buyer who will pay 200 percent margin to remain for 5 weeks and will buy these shares. So practically if you have lost one Monday, first Monday of every month, probably the trading will not happen in these shell companies maybe for the next one year or so.
So yes, there are all the logics for some of the companies to get removed and if you want to short-list some of the 12 companies as per your reports which I have, in fact found out to be about 7-8, but there are about 11-12 companies. If you allow me, I can just read out those names. They are Prakash Industries, Pincon Spirit, J Kumar Infraprojects, Parsvnath Developers, ARSS Infrastructure Projects, Marg, Lotus Eye Care Hospital, Gallantt Metal, Gallantt Ispat, IndiaNivesh and Adhunik Industries. These are the few, this is the homework which I have done, find out that whether these companies.
I have tried to stretch it to 12. I may not have comfort in three or four, but so as to align with the 12 companies which channel is highlighting, so maybe these companies are having substance, these companies are having actual business model, what must have happened that they must have indulged in some intercorporate loans with these shell companies and that is how these companies also must have identified by the Ministry of Corporate Affairs and SEBI has en bloc acted on all the companies of putting them in the shell category, having received this list of 331 from Ministry of Corporate Affairs, SEBI has not exercised any of their due diligence before putting them.
The entire list of MCA having given to SEBI has been put in this. So yes, all the chances of these 11-12 companies which I have read the names can get removed, so let us keep the hopes alive that if it happens within one week, otherwise, this will lead to multiplicity of proceedings before SAT and all sort of things which will be damaging for the investors as well.
But there is no blanket, what you call, removal of these companies. As I still maintain, more than 300 companies does not classify and they will not get any relief. Maybe 12 companies, yes there seems to be hopes expecting this to put them again, back on the trading ring in the normal way.
Surabhi: What is your sense on Eicher Motors? Are you expecting another good stable quarter from Eicher as the consensus poll seems to be indicating? And particularly on Eicher at Rs 32,000, is it still a hold?
A: I do not think that the standalone numbers will really disappoint because we have already seen the Royal Enfield sales numbers in front of us for the quarter. But commercial vehicle segment or on the consolidated numbers, I do not think there will be, but market is not giving much weightage to the consolidated numbers. Now coming specifically on Eicher Motors going forward, though they have raised their capacity from 6,75,000 units per annum to about 8,50,000 and that translates into a better performance maybe in terms of sales, monthly sales exceeding 70,000 units as well which has been stagnant between 60,000 and 65,000.
But if you take the consideration of the Bajaj Auto having tied up with Triumph yesterday and the commentary of Rajiv Bajaj, the body language has been very bullish and the kind of segments they are looking for 250-750 cc, already Dominar is giving a competition to Royal Enfield, I will not be surprised that the tough competition will be seen coming into Eicher Motors, going forward from Bajaj Auto as well. So maybe the things will remain positive, but the volatility will keep continuing for the stock.
Maybe if you want to take a one-year view, I will not doubting the levels of about Rs 34,000-35,000 but will that give you a respite or comfort, I do not think so, because the kind of volatility which we see, with each news coming in, maybe the launch of the new models by the rivals, that is Bajaj Auto will definitely be seeing the stock of Eicher Motor correcting by Rs 800-1,000 also. So it is better that if he is getting a good money, he should book out at a price of about Rs 32,000-33,000 and look for other ideas.
Anuj: What is your view on Sintex Industries? Decent money considering that post demerger we have seen that some of part being higher than what it was. What would be your advise?
A: This is my reading that irrational exuberance or maybe unwarranted upmove is seen in both the stocks and I do not think that this kind of value really deserves for Sintex Plastics Technology as well as for Sintex that is textile company also which has already been existing. So it is better for her to book in both and then maybe look to really enter in the same stocks below 10-15 percent level or look for some other ideas because the kind of irrational exuberance which we are seeing in the Sintex twins are not justified and warranted.
Anuj: I wanted your thoughts on NMDC. We expect numbers today. What are you expecting and do you retain your bullish call on the stock?
A: I am expecting better numbers because if you really see the reduction process has started by the company, only from the July month and the prices of the iron ore for the fine and lump, but have been kept unchanged for the whole of the quarter, number one. Number two, if you see, in Q4, there was maybe some kind of exceptional write offs and all that, and probably if the company can give the commentary or maybe guidance or maybe by way of a footnote for monetisation of three million tonne steel plant, for about Rs 12,000-13,000 crore, that can also be a sweetener.
But coming specifically on the operational front, I am expecting better numbers and the reduction in the iron ore prices which we have seen in the month of July, probably will get revised upward for the month of September and that will be seen positive. So keeping the hopes of the fine numbers and even apart from that if the numbers are looking little flattish, we have been keeping a positive view on the stock.
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