SP Tulsian of sptulsian.com is positive on banks and his prime picks are Yes Bank, Kotak Mahindra Bank and RBL Bank. He also expects a path breaking Budget this time.
SP Tulsian of sptulsian.com is positive on banks and his prime picks are YES Bank, Kotak Mahindra Bank and RBL Bank. He also expects a path breaking Budget this time.
Below is the transcript of SP Tulsian’s interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18.
Anuj: Your thoughts on two of your favourite stocks, where numbers have come out today, Kotak Mahidnra Bank and Maruti.
A: First on Kotak. Excellent numbers and if you recall, we have been taking three private sector banks on top-priority as our prime picks – YES Bank, Kotak and RBL Bank. If you really collate all the numbers having declared till now, probably all three will appear on top of the table in all respects. Probably, I will put IndusInd Bank at fourth place. So, excellent numbers and the kind of performance which we have seen, there is no point in talking on all the features of the asset quality, moving the stressed assets to the standard assets, reduction or improvement in the asset quality. Taking all this into consideration, the results are really seen quite good.
Coming on Maruti, actually if you really ask me, though the market has received it well on the expected lines, but I will take these numbers as subdued for the simple reason, if you see the realisation in this quarter, per vehicle has increased to Rs 4,95,000 against Rs 4,85,000 on a sequential basis in Q2. In spite of that, the operating profit margin has reduced from 11.86 percent to 9.67 percent and this is a big miss which the market has not considered and probably this may disappoint the party going forward. Maybe because of the expiry considerations, people are keeping the share at the constant level, but I will not be surprised to see profit booking coming in, in the Maruti stock. I am not saying that this will slide or this will maybe by Rs 500 or so, but it can definitely correct by about Rs 200-250 because if you really see, the operating profit fell from Rs 2,400 crore to Rs 1,850 crore in spite of, not the similar, I have given you the per vehicle sales amounts, so I am not happy with Maruti numbers. And considering the share now ruling at Rs 5,600-5,700, there is very little scope because obviously the numbers for March has to be seen first starting with January. So, I will not be taking a buy call, maybe those to whom we have advised going for the buying maybe in the last 3-4 months. We will advise to go for profit booking and look to buy Maruti at a fall of about Rs 200-250 in the next one week or so.
Anuj: Your thoughts on Arvind? They are merging Arvind Brands with the listed company.
A: I do not think that this is such a big news which warrants the rerating for the stock because if I just focus on the results as of now, the results have been quite flat. And if you see, on the branded apparel segments, the earnings before interest and taxes (EBIT) has fallen from Rs 18 crore to Rs 10 crore. So, that is seen to be a disappointment. So, overall if you take a valuation call, the way the infusion or taking stake in the retail space by a private equity investor that has really made the shares to move up quite high. And in fact, we see the stock moving up swiftly whenever the informed buying starts coming into the stock. But looking at the results and even considering this news of subsidiary merger, I will not be rerating the stock and taking a positive view.
Anuj: For February series, what are the key stocks that you would be watching out for? Of course, we will have Budget up front in the February series and then of course, we will move on. What would be the key stocks to watch?
A: First let me recap when this January series has started, I have given the level of 8,500 when the street was all circumspect and we were talking of 7,500 levels. And in fact, on Bank Nifty, I gave a level of 19,300 when it was ruling at 17,900 or sub-18,000. I am happy that both the targets of Nifty 8,500 and Bank Nifty 19,300 having surpassed way ahead. Now, actually if you really go by the Budget theme because Budget is a very big event, so till February 1, that is Wednesday, we will be having Friday, then Monday, Tuesday and obviously the Budget day has to be excluded, for first three days, in fact I am seeing good positive bias, difficult to take a call but on a ball park basis, I can say that about 150 point rise on the Nifty can be seen maybe at a level of 8,700 plus, 8,700-8,750.
On the Bank Nifty, again I have seen one news getting flashed on the channel about half an hour back that government is going to put the recapitalisation amount of Rs 10,000 crore. Sometimes, I feel that it is really very funny. How can that amount get allocated or provided for in the Budget when last time it has been provided at Rs 25,000 crore. In fact, I am expecting this to be much higher, anywhere between Rs 25,000 crore and Rs 40,000 crore. And if you see the renewed buying momentum which we will be going to see in the PSU banks, in fact if you see, the whole Bank Nifty management today has happened largely due to the rise seen in the private sector bank. The public sector banks have yet to perform. If you really see 3-4 public sector bank results have come and I do not think there is much disappointment on the asset quality. Maybe in cases of some of the banks like Indian Bank and Indian Overseas Bank, in fact, I am impressed with the numbers having posted by them.
Similar is the story going with the larger PSU banks like maybe Bank of Baroda, Bank of India, Punjab National Bank, State Bank of India (SBI). So keeping a positive bias on the PSU banks for the next three days and the kind of swift rally which we see, take the case of foreign institutional investors (FII) people will start all talking of the FII buying only who have all been talking of the FII selling. So, for the next three days, I am keeping the positive bias and obviously no point in speculating that thereafter the market will remain positive, because everything has to be considered in light of the majors or the announcement being made in the Budget which again I am expecting it to be a very path breaking Budget this time.
Sonia: The basic numbers are 12 percent growth on the topline which was largely expected. The profits have come in at Rs 151 crore, so that is actually a 10 percent growth that we are seeing on the bottomline. As I await the margins, how would you read prima facie into these two numbers?
A: If I compare Exide Industries with Amara Raja Batteries, these numbers are definitely looking better, but again, one has to really go through and see the results in total because you just cannot take on these two calls, but overall, when I compare it with Amara Raja Batteries, the numbers are looking slightly better.