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: Thoughts on Divis Laboratories. It is a stock which was a huge multi-bagger and then we had all these problems with the US Food and Drug Administration (FDA). Do you get a sense that the risk reward is favourable? What have you made of this 10 percent move today?
A: Maybe 10 percent upmove is justified mainly for two reasons. One on the fundamental reason of the remediation of the both units seen happening, unit one and two. And if you really see, the stock was underowned and quite short-sold and probably the short covering and also may have led to the 10 percent rise because if you really take a call amongst the pharma stocks, you have to be very selective. You just cannot generalise and take a renewed buying call on all the stocks.
In fact, we have been keeping a positive view on three pharma stocks only, that has been our theme that is Aurobindo Pharma, Glenmark Pharma and Divis Lab which we have been repeatedly saying in the same pecking order. Actually our top priority has been on Aurobindo Pharma with the least on Divis. But Divis because of this fundamental news, but I do not think that now at a level of Rs 800 one should really look into the stock after having run about 10 percent today.
Anuj: Thoughts on Exide Industries?
A: I have a mild positive or maybe neutral view on Exide because if you really see, definitely the performance has seen improving. But we have seen that kind of run up having taken place in the share price also. We have been keeping extremely positive view on the auto ancillary stocks and going forward also we have the same view. But maybe on Exide, I do not think we will be having the positive view going forward from here on.
Surabhi: A lot of power stocks are also getting really excited. I do not know. Is anything changing materially? I can see some of the Adani Group stocks, transmission and generation alike, is anything really materially changing you think?
A: Seems quite positive on transmission and distribution (T&D) space because power generation space probably because of the spot prices having risen we are seeing this kind of upmove happening. But I do know how long this spot prices can really seen going up because even if you see now the non-availability of the coal and that has made this. Probably once the coal supply gets restored or gets normalised again, you will see the spot prices coming down. But yes, in T&D space, there are a lot of ideas and in fact, maybe the companies, those who are supplying the equipment in the T&D space, those are looking quite good.
So, keeping overall neutral view on the generation space and more specially on the thermal one because I do not think that the prices are seen sustainable because if you really take a call on Tata Power and Adani Power, both are struggling even on the operating cost level and both have indicated to exit from their power projects in Gujarat that is Ultra Mega Power Projects by Tata Power and about 4,600 megawatt power projects by Adani Power. So keeping positive view on T&D space, but not so much positive on the thermal space on the generation front going forward.
Anuj: Thoughts on these two stocks which are making a big move. DLF was driven by the news and Adani Enterprises where I believe you have a positive view.
A: For DLF it is a small news, Rs 240 crore commercial project in Goa. I do not think that is very significant looking to the size of the company. But yes, amongst Adani Enterprise, Adani Transmission having positive on both, but we are more positive on Adani Transmission because a while back I have said that the T&D space is really looking extremely well and Adani Transmission is one of the largest amongst the private sector and you can place them in the category of Power Grid kind of stocks. So having more positive view on Adani Transmission but having positive view on Adani Enterprises as well.
Surabhi: Today, this whole power frenzy is such that even renewable stocks are getting bid up. I am seeing Inox Wind move higher, Suzlon Energy is finding some takers today. Any thoughts here? We know the issues with these companies with the way the tariffs fell. What is the call now?
A: Amongst the renewable also, I have been keeping my low profile or maybe neutral to negative stance on wind energy because I do not think that the kind of response for the capacity additions is seen more in case of solar, rather than wind. So you have mentioned about Inox and Suzlon, both are in the wind space only. So I will not be keeping a positive stance on both. But yes, among the solar space, we have been recommending few of the stocks like Swelect Energy Systems or maybe solar energy, so they are looking good amongst the solar space rather than the wind space in renewable.
Surabhi: What is your view on PTC India Financial Services?
A: It is a gradual and consistent performer. If you really see the Q1 numbers, they have posted and earnings per share (EPS) of 1.25 and maybe FY17 EPS was higher because of the Rs 200 crore they have booked on the sale of the core investment into their various finance projects. So maybe on core operations they will keep showing an ERPS of about Rs 5 and if you go by those parameters, the stock is looking quite cheap, maybe with a view of about one year.
But I have been taking a positive view on the holding company of the PTC India Financial Services that is PTC India which holds about 65 percent in PTC India Financial Services where the query has come. So maybe if we take a view and shift from the financial services to PTC India, that will be a better migration from a capital appreciation point of view. But if he wants to remain invested, I do not think even PTC India Financial Services is a bad stock to hold for one year.
Anuj: Your thoughts on the breakout that we have seen. In general, going forward, do you get a sense that the Nifty could see newer all-time highs or higher all-time highs going forward in the last quarter?
A: When the series started, we gave a view that yes and always if you really see, September is always the better series as against October. Generally, you see weakness in first half of October and secondly, because of the advanced tax numbers, which we will be seeing by September 15, that are expected to be seen good and in fact we expected when the series started, a level of 10,200 for Nifty but that I think that is likely to get achieved much earlier and maybe I will not be surprised to see it moving to 10,300 as well. So yes, keeping a positive stance on the market for September series.
Surabhi: The other pocket of the market that has been so active is gas because of this renegotiation from Australia. Is there anything still left to play on Indraprastha Gas (IGL), on GAIL, even some of the people who are offtaking from Petronet LNG or Petronet itself?
A: Mahanagar Gas looks an extremely good stock because if you take a comparative valuation with IGL, both have exactly the same model and on the earning fronts, Mahanagar Gas will be able to post an EPS of closer to about Rs 56 for FY18 having already posted an EPS of Rs 12.60 for Q1. So we have been keeping a quite bullish view on Mahanagar Gas. In fact there is a general overall positive view on maybe stocks like Gujarat State Petronet (GSPL), IGL, but the preference goes more for Mahanagar Gas.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
