Here are some stock ideas from SP Tulsian

Watch the interview of SP Tulsian of sptulsian.com with Latha Venkatesh and Sonia Shenoy on CNBC-TV18, in which he shared his reading and outlook on the fundamentals of the market, specific stocks and sectors.Below is the verbatim transcript of SP Tulsian's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Latha: We got a lot of good data yesterday. At least we got the confirmation from the Indian Meteorological Department (IMD) about the rains. A lot of the agri stocks have already run up. Where will you find space, if any, to buy?A: This is just the beginning. There is no reason for not relying on this data because even if you take the plus or minus 5 percent error, which yesterday has been spelt out by the IMD, it is 106 percent. So, it has to be 101 percent. If you go by the history, maybe 40 years record, that is what the variance is – plus-minus 5 percent. So, we are going to see the above normal monsoon. Specifically on the various sectors. If you see across the board, firstly the agricultural sector can post a growth of 6 percent. Even if you take a contribution of about 20 percent in the overall gross domestic product (GDP), we are looking for a GDP growth of 1 percent itself, which is a very positive data point.Secondly, if you take the direct beneficiaries -- it will start with the equipments like tractors and tillers, which we have all along been talking, because the moment you have this indications, nobody wants to miss this. You cannot just say that okay, let me have rain and then I will go and buy a tractor in the month of July or June end. So, all these things will be seen in the sales of -- let us take sequential order -- these equipments like tractors mainly, then you come on the fertiliser. But fertiliser can never show a good profits in spite of the good offtake because of the control mechanism. Any recovery or better realisation in the prices because of the lower cost of production always accrues to the government. It may have a sentimental impact, but that will be a wrong message to go and plunge into it.Then you come on the agro chemicals and maybe the pesticides and all that. That will be seeing a good offtake once the harvesting or maybe two months after the sowing, maybe in the month of August September. But across the board, if you take now, people are taking a call on all the stocks, maybe rural non-banking financial companies (NBFC), those who have a presence like Mahindra & Mahindra Financial Services and even for that matter, I would say that Shriram Transport Finance Corporation kind of things, or maybe SKS Microfinance where the microfinance is playing a very big role -- borrowings and all will be there.Then you have this other kind of things, like discretionary kind of spending – two-wheelers, motor cars, automobiles, so yes, that is right. Overall it will be having an impact, but I would say that the kind of pessimism, which we have been seeing overall for economy -- go by the International Monetary Fund (IMF) forecast, that is known that India will be running ahead across the globe for the fastest growth, but domestically, the change of sentiment, the pessimism which was looming and which was prevailing needs to get changed and I do not think that anyone can quantify or estimate the kind of growth which will posted by each sector or by companies. I have been playing this when April series was not started, I said that April, I am seeing a level of 8,100 and the biggest trigger will be the IMD forecast of monsoon which I am seeing at 105 percent. This I have said, when the April series was not started, when the March was all talked off. So, sometimes it is very essential to pre-empt the events, what all events are coming in which in fact this market is lacking because there is a lot of pessimism and people have just been revolving around the current situation and are not able to foresee.Market is always a game to foresee the events of next three-six months. There is no point in talking the events of today or tomorrow or yesterday and we keep revolving around those events. So, this is a big positive event.As I said, maybe people have not started talking of the GDP growth, that will eventually give you one percent growth, as I quantified, six percent in agriculture, 20 percent to the overall and you have 1-1.2 percent if the goods and services tax (GST) comes in. You will not be surprised to see the people start talking GDP growth of double digit maybe for FY18 if not for FY17. Let us take that case.So it is very essential sometimes it looks funny that the moment we are talking six months ahead events, but they are all required to get factored in so this monsoon is extremely positive across the board for economy and for many of the sectors.Sonia: How do you approach Infosys ahead of its numbers? Do you think there will be another good performance this quarter?A: When you are looking to the choices available in other sectors and other stocks, maybe this is just academic. So I will not be taking any call ahead of the numbers. I agree that because things are looking good for the IT industry, but let us not forget that Infosys is not ruling cheap as well. So, I will wait for the results and honestly, I will not be inclined to take any pre-results position in the stock.Sonia: Generally to play the monsoon and the rural theme, a lot of people even buy into some of the fast-moving consumer goods (FMCG) names like Dabur India, Emami, Marico, etc. Anything that interests you from that space?A: All are qualifying as a good buy but I will not be -- those spending will be seen at the end when you will be making money from your harvesting and that should only be seen in October-November. By that time, things will get changed, even the sentiments and the income both. So, obviously, they will all be seen beneficiary.If you want to point out maybe one or two stocks, which are quite good is Godrej Consumer Products, GlaxoSmithKline Consumer Healthcare and Emami, because if you really see the other stocks, like Marico, I am not saying Marico is so much affected by the threat from Patanjali, but if you see the Dabur, Patanjali is giving a big threat to them also. The competition and all that. So, I will be a bit cautious on the FMCG at this stage. As I said, you can take a general call on so many sectors, but you have to put the chronological order at which it will start flowing in first from this good monsoon.Sonia: Wipro is one of the big gainers today, there is that buy ack that the board will consider on April 20. How would you approach the stock and the buyback news?A: It is very interesting to understand the buyback. If you go by the company’s cash positions, the are holding about Rs 25,000 crore. If you take the situation that board can go 10 percent with the board approval, 25 percent approval with shareholder approval. If you go by the 10 percent, that means you will be utilising Rs 3,500 crore, which will have no meaning, because Rs 3,500 crore is the annual dividend payout by the company including dividend distribution tax (DDT) because even if I take the Rs 12 per share and outstanding share is Rs 250 crore and you add 20 percent dividend distribution tax, it works out to Rs 3,500 crore. So, there is no point in going for a buyback of Rs 3,500 crore. Even if suppose they go for Rs 3,500 crore, it amounts to 2.5 percent of the total float. So, I expect that they will probably be going for the buyback of Rs 8,800 crore that is 25 percent of the networth of the company.So, that will constitute about 6.25 percent of the float available or maybe roughly about 6 percent after certain price hike. So, if the Rs 3,800 crore buyback is initiated, promoter holding will move to more than 75 percent -- 75.23 -- and if the Rs 8,800 crore buyback is initiated then promoter holding will rise to 78.24 percent, presuming that promoters will not tender in the shares in the buy back. So, again people have been talking that this is just to circumvent the dividend payout, because if you take 73 percent stake held by the promoter, virtually the entire 180 crore shares, out of 181 crore, will attract that 10 percent dividend tax extra, because that is the quantum held by all those things.So, even if you presume that Rs 12 dividend is received by them, they will be shelling out extra Rs 200 crore per year by the promoters. But I do not think that should be the strategy because if the company is considering buy back, they should not look to the gain or losses only to the promoter. So, I am expecting buyback to happen of 25 percent closer to about Rs 88 crore because company is sitting on a cash of about Rs 25,000 crore, which has not meaning. That surplus cash must get utilised if you are initiating this kind of move.