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.
Anuj: Your thoughts first on Lupin. That is a stock which is up 4.5 percent, but significantly off the highpoint now.
A: If you just focus only on the Q2 numbers, I do not think that you will be having any kind of complaint, but I do not think that is the only way of looking for making investments in the pharmaceuticals stocks or more particularly in Lupin and rightly so. When we have seen the cautious type of guidance coming in from the management, in fact management has said that start expecting the turnaround from FY19, but still market always wants to keep a track on the current developments. And obviously after the Q2 numbers or after every quarter numbers, they will be taking a call on the management commentary.
So taking that into account, I do not think that still there is any kind of comfort or any kind of rerating seen having happened particularly on Lupin or maybe on pharma stocks going forward. So we will be keeping a neutral kind of mood, but definitely the results are not any kind of disappointment.
Anuj: You have been positive on Jet Airways. Thoughts on what could be going right with the stock offlate?
A: Two or three things. Yes, we have been keeping a positive stance, but lately, we have said that the preference has changed. It is SpiceJet as number one and Jet Airways as number two. But if you see the situation going forward in fact sometimes you get to hear this kind of all news also that one of the promoter, I will not say that Etihad is the promoter, but even they are looking to exit and the new partners seem to be coming in.
The airline sector per se is vastly getting rerated because nowadays it has not remained a black hole kind of project. So overall if you really take a call and again, the cheapest valuations of Jet Airways because definitely the things are seen improving if not on the profitability front, at least on the financial structuring front, the company is taking all the efforts and once that gets restructured, you will vastly see the stock getting rerated.
In fact, in spite of the dull numbers, or maybe flattish kind of numbers from the company on Q1, we have seen the stock just holding, not correcting to a great extent. And amongst all three airlines, the stock is looking cheapest in all. So maybe taking these into account, we are keeping a positive stance on the stock.
Surabhi: Just wanted to get your take, in case you saw the numbers. Any view on Sparc Systems?
A: We have not been keeping a positive view on the stock lately and in fact if you really see the results, there are not reasons for the stock to really move up, but maybe some support must be coming in from the informed circle or finding it to value, those who have been having a long-term view on the stock.
Surabhi: What is your view on Mahindra and Mahindra Financial Services?
A: We are having positive view on the non-banking finance companies (NBFC) and more specially those which are on the rural focus and M&M Finance is one amongst them. Bajaj Finance is also there. Because, if you really see the situation going forward, because of the late monsoon, we will be seeing an excellent rabi crop. Actually kharif crop may have been flat, but rabi crop will be showing a good growth and that will lead to a good upsurge in the rural spending which will be seen positive for a company like maybe M&M Finance and Bajaj Finance have a rural focus or maybe Capital First, those who have retail kind of lending also.
So taking all this into consideration, though we may not be having the M&M Finance as our first choice amongst the NBFC space, but I will not advise this investor just to reshuffle for the sake of either moving into Bajaj Finance or Capital First. Since he is holding M&M Finance, even that is equally good and advised to remain invested. If he would not have invested, if he wanted to buy M&M Finance, probably I would have advised him to go for Bajaj Finance or Capital First.
Anuj: What is your view on Avadh Sugar & Energy?
A: Let me just first clarify this Avadh Sugar is a new avatar after the restructuring of Oudh Sugar Mills and Upper Ganges Sugar, both were the KK Birla Group companies and the group has carried out a realignment of the mills being held now. Avadh sugar is a purely company which are owning all the Uttar Pradesh sugar mills.
Earlier, some of the mills were owned by Oudh and some were owned by Upper Ganges. Now, after this restructuring, the entire cream portion of the sugar mills has come into this stock Avadh Sugar. In the morning also when I gave a buy call on Dalmia Bharat Sugar and Industries, I said that the state advised price (SAP) announcement or hike of Rs 10 per quintal is seen to be reasonable, quite good because if you knock off purchase tax of Rs 6 per quintal which has been subsumed in the GST, that is seen minimal, Rs 4 is seen minimal.
We are going to see the increase in the ethanol prices and all that, so Avadh Sugar, you can say that this is the company among top-six companies, maybe along with Dalmia Bharat, Dwarikesh Sugar Industries, Triveni Engineering and Industries, Balrampur Chini Mills and I would put fifth number as Avadh Sugar. So though the stock is ruling at 52-week high, at Rs 1,250 but because of the positive view on the UP based sugar mills for the next 6-8 months, I will advise him to remain invested even if the stock has hit the 52-week high.
Surabhi: Your thoughts on some of the other interesting numbers of the day, whether it is Kajaria Ceramics, Century Plyboards, we have also heard from Marico now. Any of these stocks where the numbers stood out for your or you might have a very clear view, either a buy or a sell view?
A: If I take the numbers having announced till now, I think UPL numbers are looking really very good because if you see the profit after tax (PAT) of Rs 300 crore against Rs 200 crore, year-on-year (Y-o-Y), those are looking very good.
IG Petrochemicals optically, numbers are looking very good, but I will take that as a sequential, because if the stock has run up so much, IG Petro, you just cannot compare them on a Y-o-Y basis. So taking a comparison on a quarter-on-quarter (Q-o-Q) basis, one may say that there is a bit disappointment because PAT has corrected from Rs 39 crore to Rs 33 crore.
If I take a call on the Kajaria Ceramics, there has been a sequential improvement because Q1 numbers were a bit dull and post that, again there is no point in taking a Y-o-Y call, I am not disappointed on the income not increasing so much. So taking that into consideration, results are looking good.
HIL, CK Birla Group company, that has reported reasonably fair results with an EPS of 12.5 for Q2 with H1 EPS of Rs 62. So that looks good.
Alembic, the smaller company, that has also shown a marginal improvement in the working with EPS of Rs 1.06 against Rs 0.85 on a Y-o-Y basis.
So these are the few numbers where you have mixed reactions, some of them are good. Like UPL, HIL and Alembic are good, but otherwise, Kajaria and the other one is satisfactory one.
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