Here is why SP Tulsian is bullish on Dish TV

In an interview with CNBC-TV18, SP Tulsian of sptulsian.com, explains why he is bullish on Dish TV. He also talks about some energy and sugar stocks and discusses the impact of the UP elections on the market.Below is the verbatim transcript of S P Tulsian’s interview to Sonia Shenoy & Anuj Singhal on CNBC-TV18. Anuj: I first wanted your thoughts on the news that is flashing on the screen and since you track Sarda Energy and JSPL as well any thoughts on how to approach these stocks based on the news? A: As Nigel has analysed this I don’t think that this is negative for the stock because if the amount would have come then that would have been the extra sweetener for the company because we have seen Sarda Energy receiving this kind of compensation in the first quarter and they have challenged that amount should be quite high. The companies may be right, but these were all approved by the cabinet committee and this was a very major issue which was decided by the Supreme Court and very meticulously the things have all ordered out. Maybe Sarda Energy and JSPL both were involved in those things and they have lost their claims which was rejected by the Delhi High Court. So, I don’t think that this can be seen as negative, if that extra amount would have come then that would have been seen as sweetener, but this was not seen tenable otherwise also. As I said Sarda Energy had already booked in the first quarter being the exceptional gain in their financials it was expected or it was estimated that that is the end of the receipt of this amount by the company. Sonia: There is some buzz that Gujarat Fluorochemicals is looking at restructuring of the company of course not confirmed yet but the stock has been rallying quite a bit. Anything within this group that you like? A: If you take a call on Inox Wind, I think the performance of the equipment division has been very good. In fact if you recall in the past also we have discussed that the wind generation or the wind generation business, the segment that has been seen laggard for Inox Wind. I don’t know the exact capacity, but I think they have a capacity of closer to about 300 megawatt and that was seen a big drag and the balance sheet was seen at leveraged position. So, maybe because Gujarat Fluoro is having holding in the Inox Wind this will be seen as a positive but still we need to wait for results to be seen for Inox Wind for whole of FY17 and then the commentary thereafter. So, if that happens then I will probably take a call on Gujarat Fluoro and INOX Leisure. I won’t be taking a call on Inox Wind at this stage because after exiting from this wind turbine business, the generation business the second problem remains for Inox Wind is the high receivables or maybe the high working capital so what will be the situation prevailing thereon on that front has to be seen. But company definitely, will be mobilising an amount of over Rs 1,000 crore by monetising this wind power assets and that will get largely utilised for reduction of that debt of the company or maybe for financing the working capital. So, one has to really understand the broad contour but on face of it this looks positive for Gujarat Fluoro. Since you have asked for the other groups stocks then I am keeping a positive view on INOX Leisure and not on Inox Wind. Anuj: Some thoughts on Dish TV, the market is getting sanguine maybe about the deal between Dish TV and Videocon. If it does go through, do you think it could lead to a bit of a rerating of Dish TV, something that we have seen maybe today as well? A: Definitely it will be seen positive in terms of the market share because if you now see, Dish TV has a market share of about 26-27 percent. Maybe Videocon has about 15-16 percent, so, they will become number one positions with share of about 42-43 percent with Tata Sky coming at a second position at 25 percent. So, I don't know what will be the pricing power and all that though I have seen that Dish TV has gone with a little stretch valuations when they acquired Videocon. However, once the consolidation happens for which the permission is seen to be coming in favour of Dish TV, it should be seen positive on a larger scale. Anuj: We are again revisiting the JSPL stock. You heard what Ashmit had to say, any thoughts on this news now? A: Actually, when the government cancelled the beat on the ground that this was un-remunerative, at that time, in fact, there was a lot of complaints which were seen having come to the government also that the cartel has happened. I am not trying to put any allegations on Jindal Steel and Power, but at that time it was said that probably the Cartel and the pooling has done and because of the not wide participation these three coal blocks got awarded. To avoid that to any kind of litigations and controversies and delegations, the government has rightly cancelled it. So the case of JSPL was weak from day one, when the process of this auction has started which has passed through very seamlessly and happened very smoothly by this new government post the Supreme Court order in the coal mine allocation. So one has to really understand the situation where any law point exists because if company opts to move, as Ashmit has said, if it opts to move to prefer an appeal in the Supreme Court, some law point has to be there which I do not think that really exists because things are looking weak in favour of the company. So maybe I will be keeping a cautious view of the share price because I do not see any relief seen coming in favour of the company even at the Supreme Court level. Sonia: Sugar is the space that you watch closely how much stocks would you put into these comments that just came in from the Prime Minister? A: If I just focus on this news and correlate this with the Balrampur Chini I don’t think that Balrampur Chini owe any of the amount to the sugar farmers. Their company has become now a debt free except for maybe a small amount of Rs 200 crore which they have the soft loan from the sugar development funds. None of the sugarcane arrears are seen from the company and in fact if you recall company has gone with a share buyback for about Rs 175 crore. They bought back 1 percent of the equity in which the promoters have also tendered their shares in the same ratio of their holdings of about 40 percent or maybe 35 percent. So, sometimes it is unable to jump on any of the news. But let me give you the fundamental news on the ground for this sugar season Maharashtra and Karnataka will be showing 42 percent lower production of sugar while UP will be showing a higher production of about 19-20 percent what they have produced in the previous season. UP has produced 68 lakh tonne in the previous season and now it is estimated that this season they will show a production of about 82 lakh tonne. The way situation is prevailing on the sugar I think that maybe April or May or maybe in the month of May and June I won’t be surprised to see prices moving to a level of Rs 41-42. So, I am keeping a highly positive stance of the UP based sugar mill but won’t give any credence to the news that Prime Minister has promised to waive the sugarcane arrears. If that happens that will be seen positive for the cooperative sugar mill and not for the private sugar mills like Balrampur Chini. Anuj: Your thoughts on whether this market rally has more legs to go as we move on from here? A: Actually, UP election is a key factor in the near-term. If you take a call that BJP is seen emerging as winner with 205 seats, that will change the total landscape for the market because for the simple reason that from here on till the next Lok Sabha election, you just one crucial state going for the election that will be Gujarat probably in this calendar year only if I am not mistaken maybe in the end of 2017. And that is seen again as a cakewalk. So if UP is won by BJP, that will be seen a big positive on the economic front and the reforms will really be continuing and that will cheer the overseas investors and if that happens, then maybe I will not be surprised to see the index of 9,500 on Nifty in this financial year itself.