SP Tulsian of sptulsian.com, explains why he is bullish on Yes Bank. He also shares his views on several other stocks, including Torrent Power and Hatsun Agro.
Below is the transcript of SP Tulsian’s interview to Anuj Singhal and Latha Venkatesh on CNBC-TV18.
Anuj: Is this is a case of buy on rumours, sell on news? Do you see the rally in both YES Bank and Federal Bank resuming at some point?
A: I would say that buy on fundamentals for both the companies because if you see the YES Bank numbers, I think they are excellent. I do not think any kind of – I have heard your analyst saying that other income having raised for this one, but all other income is relating to the non-fund based activity in which YES Bank is seen quite active. And if you see the corporate banking segment having exceptionally performed well, if you do not have any kind of increase in your restructured assets or maybe in the net non-performing assets (NPA) having maintained in the same ratio, I do not think there should be any cause of concern.
So, if you really ask me, probably YES Bank, and if you actually recall, YES Bank has been on my top-pick followed by RBL and Kotak Bank, and I will not be surprised to see YES Bank moving to its 52-week highs or maybe all-time high of Rs 1,450 what we have seen at the time of the qualified institutional placement (QIP) having shelved at that point of time looking to these numbers.
Coming on the Federal Bank also, I am equally impressed with the numbers because if you really see he improvements because if you see the current and saving account (CASA) and maybe the improvement in the net interest margin (NIM) also, by 10 basis point for Federal Bank, everything goes well or in favour of. Again no complaint on the asset quality of both the banks, Federal and YES. But apart from that, the other features which I have been saying or maybe in case of YES Bank, if you see, return on assets of 1.8 percent getting maintained, in view of the so much apprehensions seen prevailing from this demonetisation and all that, I do not think that one can really expect the best.
Maybe these some kind of profit booking will keep coming in because obviously the traders, those who have made huge gain of maybe 15 percent plus in YES Bank, maybe probably in this last couple of weeks or maybe in this series. Similar is the case with Federal Bank, it moved up by 6-8 percent. The profits are definitely going to come. But if you are as an investor, on a fundamental basis, both qualifies as a buy at the current level.
Anuj: I wanted your thoughts on Ludlow Jute & Specialities whose numbers came out and the stock reacted rather sharply on the way down. Is it an opportunity to top-up or are you disappointed with the numbers?
A: Highly disappointed and I do not think that one should take a plunge into the stock even now at this correction and maybe, one can have a cautious call on the Cheviot Company and the other two jute companies as well.
Latha: I wanted to ask you about ICICI Prudential Life Insurance Company. That has now gone past its initial public offer (IPO) offer price. Do you like it over Max Life?
A: It has gone past IPO price so my advice is that those who have been stuck in the stock better take an exit because if you see the valuations, this has been my view that I have never found the valuations reasonable at that point of time when the IPO came in, I gave the valuation of Rs 300-310 and actually if you see the whole market, when you have been getting so many ideas and IPO allottees struggling to see his cost after two or three months, I will not be keeping a positive view on both. Maybe there is no compulsion, but yesterday, we have discussed on this about the general insurance companies on the PSU stable. Five companies will be going public as indicated by Finance Minister yesterday. So, that could be a very interesting idea. Except for that, I will not be taking a positive call on any insurance company because if it is an embedded model, then it is okay. But if you are taking an individual call on a pure insurance company, I do not think this is the time to take a call on them.
Anuj: This has been the stock of the day, Torrent Power. Any fundamental call here?
A: Fundamentals of the company are looking very good, but the only problem which we have seen with the company that for the last three quarters, they have not been able to post the good numbers. Maybe last quarter of the FY16 plus these two quarters. But there has been and in fact, if you recall, we have been taking the positive call on all the Gujarat based power generation company. If you recall, Torrent Power has presence in Surat, Gandhinagar, and Ahmedabad. All these companies, Surat Electricity, Ahmedabad Electricity, got merged into it. They have distribution in Agra, they have distribution in Bhiwandi. So the things are looking quite robust, they have a very good generation capacity, they have a very good transmission and distribution. In fact, there are very few companies available, like maybe CESC and this Torrent Power.
But apart from that, three companies which in fact we have discussed in this last one week in addition to Torrent Power that in Gujarat Mineral Development Corporation (GMDC) and Gujarat Industries Power Company (GIPCL). So, we have been keeping a bullish view on power generation because we are expecting the power demand to go up and that will see the power generation companies really benefitting a lot. And the same thing here with Torrent Power, they have their captive mines, as I have said that they have their distribution also because they are distributors in Surat, Ahmedabad and Gandhinagar, plus the distributor in Bhiwandi and in Agra. So, all these things are putting in an advantageous position, but honestly, if you really ask me, I will not be able to comment on these block deals and the specific upmove of 7-8 percent seen today, but all these three stocks, GIPCL, GMDC and Torrent Power have risen by about 10 percent in the last couple of weeks.
Latha: Any of the recently announced numbers, do you take an interest in stocks like Hatsun Agro Products?
A: Hatsun Agro, numbers were good, but I do not know how much upside we have seen today in the stock, but it has been up by about 10-12 percent. So, I do not think results really justify that kind of upside, but today, number which have really come in is of Kirloskar Pneumatic Company and that has not been discussed much. If you really see, the earnings per share (EPS) has come in at Rs 15.60 for Q3 against Rs 4.68 for Q2, while for whole of FY16 was at about Rs 28 which has been achieved in this nine months. So, I am keeping a positive bias on Kirloskar Pneumatic.
But apart from that, I will not be disappointed with the numbers of Ujjivan Financial Services because of the provisions having clarified by them. Generally, what happens with these microfinance companies, thee promoters keep coming in the intermittent period also. And once they give the recovery rate, maybe after 15 days or a couple of quarters or after one month, that can regenerate the interest in the stock at the current level. And we have already discussed that YES Bank has been good numbers, Hester Biosciences which we have seen in the morning, that has been more or less on the expected lines. So, broadly these has been the call on the numbers which have been declared today.