In an interview to CNBC-TV18's Anuj Singhal and Surabhi Upadhyay, 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.
Anuj: Really interesting day today. We have seen a lot of individual stocks make big moves. I wanted your thoughts on a couple of stocks to begin with, Reliance Capital, that is down about 4 percent in today's trade and also Indo Count Industries which has been going down one way over the last 3-4 days. Your thoughts on how to approach some of these stocks now.
A: First coming on Reliance Capital. In fact, market has seen to be over bullish on the stock price, merely on the news that company is coming out with their issues or maybe part listing of their mutual fund business and the other home finance business getting hived off. But market has forgot to realise that the company is under debt, under the huge stress of debt, even the group and company and they want to just monetise this part assets and reduce the debt. But that is not seen happening and anytime you have seen this kind of upsurge seen coming in the stock price of Reliance Capital, that has never sustained.
That has always been sold off at the higher level by maybe the larger investors or maybe it is an effect of the overbought positions getting created on all these frenzies. So I am keeping my fundamental weak view on the stock going ahead even after having these all initial public offerings (IPO) coming in from the company and all.
So probably the profit booking and when you have these kind of bearish market where there is no sentiment for buying the quality stock, obviously nobody will look because always Reliance Capital has come at the lower end of the non-banking finance company (NBFC) list if you really plot. And the company has never got the valuations and all that which has been given to other comparable peers.
And coming specifically on Indo Count, if you all recall about when the stock was ruling at Rs 180-200, I have at that time, very bluntly said that this is all momentum and in fact fundamental does not justify. In fact many times, I do not remember, maybe 8-10 times the management has come on the channel in this last six months, they have always said that no, they are doing quite well and all that, but the things were never looking good for the company.
The kind of momentum, the kind of street information which we used to collate and gather in respect to the company was indicating more of the speculative activity and actually if you really ask me, the similar kind of things are seen happening in another company that is called Ginni Filaments.
And both, I do not want to name the players and all that those who have been active in the stock and at that time, since then, I have been cautioning that remain away from the stock, it does not justify the kind of multiples which it is getting and the kind of valuations at that point of time, it was ruling at around Rs 180-200.
Surabhi: Just talking about pharmaceuticals and the kind of bargain hunting that seems to be going on, right now I am seeing all the major, the largecap pharmaceutical names, Dr Reddys Laboratories, Sun Pharmaceutical Industries, Lupin, almost all of them are up and about. Have you changed your view at all? Is there any sign of value emerging in the likes of Lupin and Sun in the largecaps side now?
A: No I have not changed my opinion and more specially after seeing the pharmaceutical policy. Maybe except some of the active pharmaceutical ingredient (API) makers in India, probably can be looked into, but even there, one has to be very critical like maybe suppose, if I just say for the local API makers, Divis Laboratories fall in that category. But I do not think that any kind of improvement has seen happened on the US fronts, maybe in terms of the margin or maybe in terms of the US Food and Drug Administration (FDA) issues though the Laurel Pharma Labs or the Aurangabad plant for Lupin has seen some kind of clearances, but they are just a baby step or maybe very tiny step, so I have not changed my opinion, I continue to have that, remain away. In fact there is no reason to be finding some ideas merely on the narrow issue of pharmaceutical policy where the focus will be more given on the API makers and all that, still that should also be over looked and one should remain away from the pharmaceutical stocks even now.
For entire discussion, watch accompanying video...
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