Here are a few stock ideas from Mayuresh Joshi

However, the industry is going through tough times when it comes to medium and heavy commercial vehicles (M&HCV) volumes, that might exist for another couple of months to say the least and though we expect some rebound to start happening in Q3 of this fiscal, largely it will have some negative impact in terms of how earnings will pan out. So I do expect the stock to open in red, but le the stock consolidate and let us have a look at the numbers as to how they pan out in Q2.

Hence, expectations are that the rebound should start happening from Q3 and the margin should start rebounding as well, but this merger will have negative impact as far as their balance sheet is concerned.Sonia: Your comment on Reliance Communications, on the merger with Aircel. What kind of a near-term and medium-term outlook do you have on that stock?

A: From a near and short-term perspective, the stock will react positively because the positives that we are seeing from huge subscriber base coming into play, they are getting into 22 odd circles, you are probably looking at revenues which are far in excess of what individual entities reported.

However, let us look at the flipside. If you look at the net debt; the net debt is going to increase substantially, it is going to be highly levered entity to say the least and even if we say that the operational expenditure (opex) synergies start coming through, as the management has been indicating, the net debt to EBITDA still raise pretty high. I think their wireless business still does not have that much amount of revenue per minute (RPM), the revenues still remain extremely sluggish. You are probably looking at competition from Reliance Jio which will also probably ensure that the cash flows will not improve as a whole for the merged entity as well in a substantial manner.

So, in that sense, the stock might react positively from a short-term perspective but may take a neutral stance. And even on the residual business, with the kind of consolidation that we are seeing in the telecom space itself, the tower companies’ enterprise value can also come under some bit of pressure. So in that sense itself, the tower asset sale, the optic fibre sale, those values will be extremely important that Reliance Communication will be getting through over the next few weeks as they have been indicating. And if it is a little bit less than what the market is expecting, the debt still remains extremely high. So, my sense is that the cash flows will still struggle for the merged entity as well as for the standalone entity.

For entire interview, watch accompanying video.