Here are a few stocks ideas from SP Tulsian

Coming specifically on Indo Count, yesterday while analysing the Q1 numbers also I have said that if the company is seeing a degrowth and the kind of momentum or the price maintenance which we have seen in this share price, I have never been comfortable when the share was ruling closer to the level of Rs 950-1,000 because Welspun and Indo Count are identical in the same space and you just cannot compare Indo Count with any other company like Himatsingka Seide or maybe Arvind. So, maybe similar kind of things, I will not be ruling out, because all the US, foreign buyers will be looking into the procurement which they are making from the Indian companies and Indo Count can also come on radar. However, if that happens, I would say that if the momentum breaks, I am using momentum as a sophisticated word or if you use it in a market language, if satta breaks, then definitely you see the prices falling again beyond a level. I am quite apprehensive on the Indo Count as well because things have not got damaged yet but it is just the apprehension which has made the share price to correct to Rs 150 or so and the Q1 numbers which we have seen yesterday are definitely flat.

Latha: Do you think that what has happened on Welspun is going to cast its shadows on other textile exporters? You spoke about Indo Count. Is there anything else that we should keep on the watchlist?

A: Among the home textiles Welspun is the largest company in Asia and home textile is a very big market and the kind of things, you can compare it with the lapse on part of the company, if it is found to be correct that they have used the Indian cotton instead of Egyptian cotton, it is like something 483 for the pharmaceutical companies of US Food and Drug Administration (FDA). You are just trying to pass out anything in the form of the higher quality of the cotton having used in this company.

However, home textile, maybe I am talking a decade back, it was very much well fragmented, very well unorganised market, but actually in this last two-three years or maybe in the last five years the market got consolidated and even the foreign buyers have all gone and confined to the reputed manufacturers like Welspun India. If I just recall, one decade back there used to be 10-15 export houses that were very active. I do not want to name them here because they no more exist and no point on giving the names of those companies. They were all closely held companies; few of them were listed companies also. So, if this market also starts hitting because of this bad manufacturing practise and all that then this will be seen very badly for the textile market.

Sonia: Wanted your thoughts on Engineers India (EIL). Were you convinced with the numbers and at this price of Rs 240, how does the risk reward look?

A: Excellent numbers and especially when you see it coming in the Q1 because generally for project consulting company Q4 numbers is the best, but company having posted operating profit of Rs 68 crore against Rs 26 crore on a year-on-year (Y-o-Y) basis, really instils confidence but yes, one has to really wait and see for the Q2 numbers because merely seeing these Q1 numbers, looking to the current price, I will not be taking a buy call on the stock.

Latha: I also wanted to ask you about the sugar stocks. I am sure you have been asked enough. You caught it before it became a multi bagger, but now there is profit taking. Would you shed any of the stocks at this juncture? Would you still stick with any of them?

A: After seeing the results of two companies, I distinctly remember when Dalmia Bharat Sugar and Industries came out with the numbers, at that time, about ten days back I said to exit from all the sugar stocks because now the sugar stocks are only seeing momentum because if you take a call on Karnataka and maybe Tamil Nadu based sugar mills, I do not think that any one of them have really impressed. But yes, coming on the few four or five sugar mills in Uttar Pradesh like Dhampur Sugar Mills, Balrampur Chini Mills, Dalmia Bharat Sugar and Industries, Oudh Sugar Mills, Upper Ganges Sugar, Dwarikesh Sugar Industries, all of them have shown good numbers. However, now the offseason expenses are eating away the inventory gain and the kind of momentum which we are seeing now like Oudh Sugar going up continuously by 5 percent for last three-four days, Upper Ganges hitting 10 percent, whenever you see these kinds of momentum - that is a clear sign of distribution happening in the stock and strong hands will keep the two-way volatility going on.

Actually I am seeing a big distribution pattern happening. If you see the situation for Q2, companies only in UP are holding the inventory and that inventory gain will be taken away partly by the offseason expenses. So, I do not think that Q2 numbers will really be cheerful the way we have seen for Q1. If you have seen the profit booking after Q1, which in my view seems to be the peak, that was the reason I have been giving a profit booking call in all the sugar stocks above for the last two weeks since the day Dalmia have announced their numbers.

Sonia: The biggest Nifty gainer right now is Aurobindo Pharma, 3 percent higher. At Rs 760, how are you positioned on the stock?

A: I have been maintaining positive view on the stock. However, the best part is they are maintaining their US market share at 45 percent and their pipeline seems very strong of the new drugs and all that and Rs 10 earnings per share (EPS) on a consolidated basis, everything is going in the positive direction amongst the pharmaceutical companies. So, keeping a positive view and I will not be surprised to see the share moving to the level of Rs 810-815 in the next series or so.