In an interview to CNBC-TV18, SP Tulsian of sptulsian.com shared his readings and outlook on specific stocks and sectors.Below is the verbatim transcript of SP Tulsian's interview to Latha Venkatesh & Reema Tendulkar. Latha: Any thoughts on LG Balakrishnan and Brothers?
A: It's a good company but only one or two points which I have not been very excited about this company. One, lower promoter holding of less than 50 percent and second, stagnation in their margin or maybe in the topline also because Q1 numbers have been a bit subdued but after hearing the management, the concerns or apprehensions which were there of slight extent gets allayed but still I would be waiting to see the Q2 numbers, which are generally seen good. However, Q1 numbers are generally dull but with earnings per share (EPS) of Rs 40 having seen for FY16 and the kind of growth which we are seeing for the auto ancillary stocks, I am expecting the company to post at least Rs 48-50 EPS otherwise this stock looks a bit stretched or a bit expensive.Reema: Steel stocks did very well, the likes of Tata Steel, Steel Authority of India (SAIL). The 66 steel products on which the monthly income plans (MIP) was expected to end yesterday, for all the products we have got protection in some form or the other. Would you still bet on any of the steel names and if yes, which ones?
A: If you take the MIP extension by another couple of months, definitely this is positive news but I have been saying this for last couple of weeks that things are looking very positive on the steel front. The iron ore prices have been rising, the other related products like manganese ore or maybe the ferro alloys, all the product prices are rising and that is why in the past couple of weeks, I have given the buy call on many of the stocks like NMDC, Sarda Energy and Minerals, Sunflag Iron and Steel Company. So my point is that that things are looking good, China in fact, has stopped dumping and in the last 17 months, for the first time India has turned an exporter and the growth of 17 percent, which we have seen in August, for the steel has augur quite well and the extension of this MIP, which was very much warranted because you just cannot kill a industry which has started rising from ashes, they faced a tough time.
Therefore, now things are looking good for the steel industry and now if the government requires after couple of months also, another extension, they will not hesitate to give that or if they are able to see that they are able to compete with, and the China import having tapered off then things may not get extended but as of now I am keeping a positive stance on the steel sector and in fact more on the midsize steel companies which I have stated.Reema: Bharat Forge, when we got the September US Class 8 truck, we had spoken with the management and they indicated that the worst of the weakness in the US truck sales is behind us, things will improve going forward, but looking at the September data down 27 percent year-on-year, down 2 percent month-on-month, it doesn't look like that. How would you approach Bharat Forge considering that the stock has seen a good run up in the last two months?
A: Yes, the stock has run up in the last two months and it has risen not by Rs 50-100; it has risen by Rs 200-250 when all the experts were taking a negative call. However, I have always said that you do not need to take a call on month-to-month basis for these truck orders. Definitely the management commentary, which we have seen about couple of week back, has been very reassuring, the target which they have given by FY17, they will definitely achieve that and those targets are seen quite respectable. So, I won't be too disturbed with this one month data. Definitely the stock after having run up so much by about Rs 200-250 in the last three months, it will definitely be seeing some kind of profit booking, but if it corrects below Rs 50-60 - that qualifies as a buy for the stock because I am keeping a positive view on the stock from a medium-term point of view.
Latha: Anything else that you want to point out in the midcap space, everything has run up. Where do you still see value?
A: There are umpteen ideas in midcaps steel. It is very important to look at the steel companies which has the least debt and if I add some names in that category, one could be Sunflag Iron and Steel Company; they are not only making the steel products but they also make for engineering, defence, auto ancillaries with a very least debt of Rs 100-150 crore. The other stocks are Prakash Industries, Kalyani Steel, a Kalyani Group company with earnings per share (EPS) close to Rs 40 also Surya Roshni, so there are many stocks available in the steel space because if you take a call on the larger ones like Monnet Ispat, who have been struggling with huge debt. I am not too comfortable and I have always maintained that my positive bias always remained on fundamentally strong stocks and having the second rung category. I only keep my positive stance on JSW Steel.
As a trader one can take a call on Tata Steel also for the near term or maybe short-term calls but if you take a call on these four-five stocks, I won't be surprise to see them giving a return of 50 percent in next six-eight months. So these are few themes and continuing with dye intermediates space etc, which I have stated umpteen numbers of times on the channel. So that continues to be the good story.
Non banking financial companies (NBFCs), after rate cut, if you see the positive stance seen from all the NBFCs like Ujjivan Financial Services, Bajaj Finance, Equitas Holdings, they are all looking very good. So as of now these three themes, steel, dye intermediates and NBFC can be played on for the next couple of weeks.
Reema: Tourism Finance Corp of India has been picked up by Rakesh Jhunjhunwala yesterday. Would you recommend that stock?
A: If you knockoff this news of Rakesh Jhunjhunwala's fund buying this stock -- however, in the past also whenever the prices have moved up, they have not sustained. People have been keeping high hopes on Tourism Finance kind of things but that innovative concept has not picked up very well. You just cannot say that Tourism Finance has been doing great on that front. So I won't be taking a buying call now at the higher level since the stock has seen such a good run up.
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