Here are some stock ideas from SP Tulsian

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com spoke about his reading and outlook on various stocks.On JustDial he said, "Things are looking quite weak on the fundamentals. I continue to have my negative view on the stock and I won't be surprised to see it falling further from here on by about 20-30 percent".He is positive on stocks like Cipla and Adani Ports."After seeing the results of Jet Airways and IndiGo, definitely I am not keeping a positive view on both the stocks", he added.Below is the transcript of SP Tulsian’s interview to Sonia Shenoy, Latha Venkatesh and Anuj Singhal on CNBC-TV18.Anuj: Let us discuss the merger between Treeh House and Zee Learn and there is a revised ratio from 5:1 to 1:1. What do you make of that?A: This leaves a question mark on all three, that is the valuer or the professional body maybe a chartered accountant who has advised this earlier and now, number one.Number two, even on Tree House, because if you recall the share moved to as high as Rs 450-500 in the past, about a year back, then suddenly you see the fortunes of the company getting changed. So, that clearly establishes that it was a case of price manipulations, I do not want to repeat the names. I have been repeatedly cautioning investors against these type of moves. So, definitely that leaves a big question mark on the integrity and the kind of price manipulations, which we see happening in the stock market in few of the stocks.Third, on Zee Learn -- if you see the swap ratio was 5.3:1. It was not 5:1, it was 5.3:1. The hurriedly called board meeting and where this merger was approved where half of the promoter stake of the promoters of Treehouse was transferred to some of the unknown companies, which are seen to be closer to the proximity of Zee promoters and suddenly, you see the prices getting changed to this 1:1.I am not worried on the swap ratio. Take for instance Q2 results, again will be very horrible from Treehouse, again will you reduce it to 0.5:1? Again third quarter numbers will be horrible, will you make it to 0.25:1? Because, all this swap and merger and everything takes time. It takes about 5-6 months time. You have the interim quarter results coming in from those companies. So, I am seeing this for the first time in my 40-42 years career of stock market where we are seeing these kind of things happening.I do not think all these will go unnoticed by Securities Exchange Board of India (SEBI). If SEBI allows this to happen then anyone at its own sweet will can keep on changing the swap ratio. You have no meaning of timeline, you have no meaning of the guidelines, you have no meaning of the valuer certificates. As I said earlier, the valuer should be questioned that what was the basis? Some valuer must have given the valuation certification of 5.3:1 at that point of time also and now he must have given 1:1 also.So, this is a mockery of the rules of the corporate governance and this is nothing but the unethical behaviour on part of both the promoters are seen getting reflected for which the market is definitely penalising them and the case in point, we have seen is the Aditya Birla Nuvo and Grasim.Latha: Your take finally on the Grasim-AB Nuvo deal. At the moment, what should the two investors do?A: We need to look from many angles and if you quickly come on the share price and the swap ratio, market is very smart in factoring in the corrections immediately and that seemed to have happened. Because if you now see the share price at which the Aditya Birla Nuvo is ruling, it is ruling at 95-95.5 percent to the effective cost of the acquisition of Grasim. For example, now Aditya Birla Nuvo is ruling at Rs 1,250, so you have Rs 12,500 divided by three, you get an effective cost per share of Grasim at Rs 4,200 while Grasim is ruling at Rs 4,500-4,540. So it is a discount element of 5-7 percent.But now, people have again started talking that will this compel the management to go for change in the merger mechanism? Will there will vertical split of the financial services sector within the Aditya Birla Nuvo or not, that is number one.Number two, it is still a heartburn for Grasim Shareholders which I have been repeatedly saying, suppose prior to this merger, each Grasim shareholder had an entitlement of 1.77 shares on the UltraTech Cement shares because of the 9.5 crore issued shares of Grasim while Grasim is holding Rs 16 crore shares of UltraTech.Now, post this merger if Aditya Birla gets merged into, the effective ownership of the Grasim shareholders will get reduced from 1.77 to 1.25 per share of UltraTech. So, this difference or loss of half share has effectively gone to the promoters because by virtue of this merger, promoters are increasing their stake from 31 to 39 percent. In fact, people have all been revolving around the story of Idea benefits and all that, that is a different angle. But the major benefit of 9,000 crore to 10,000 crore has flown to the promoters by straightaway increasing their stake eventually in the enlarged entity that is Grasim or the bigger Grasim from 31 percent to 39 percent which effectively gives them a 39 percent stake in UltraTech also.So, this is still a heartburn for Grasim industries shareholder. However, if I presume that the same mechanism will continue, you have now the advantage of acquiring the shares of Grasim via Aditya Birla route because as I said, it is still available cheaper by about 5-5.5 percent and I do not see more weakness in both the shares unless and until some changes in the modalities of the merger or the modalities of the carving out of the financial services happens by the management.Sonia: Your views on Just Dial. The numbers were very weak this time, the margins at multi quarter lows but the stock has also halved since the month of April. Do you think at some point it will be a good entry point or has this story ended completely?A: About six-eight months back when it used to rule at Rs 1500, I have cautioned at that time that many of the overseas investors wanted to exit the company.However, the business model -- how many of us use the Just Dial number if you have an app of everything, so the business model was in question and the foreign investors. This is a case of -- I won't call it as a price manipulation but a wrong call taken by many of the analysts at the time when it was ruling at Rs 1500 and since then I have been cautioning that I do not see any future of this company.Apart from that you have seen the kind of tools used by the management; 2 percent share buyback at a very high rate and all sort of the gimmicks, which have been used by management mainly to see the share ruling at a higher price. So, purely from fundamentals, leaving aside the exit of the overseas investors from the company or the share buyback drama, having Rs 800 crore as cash and making use of Rs 100-150 crore only for share buyback even if you leave aside all these things, I do not have any hopes. We may talk of Just Dial Omni app etc, but I do not think those things will work. Things are looking quite weak on the fundamentals and the future going ahead. These kinds of upmoves will keep coming in, maybe the share will show Rs 50 up and Rs 50 down but I continue to have my negative view on the stock and I won't be surprised to see it falling further from here on by about 20-30 percent.Anuj: Adani Ports and Special Economic Zone after interparty transaction and the company taking a stance of cancelling that, the stock has rallied 18 percent. This is a stock that you have liked. Will you maintain a bullish stance? What are your price targets and anything else in the Adani Group that you would want to buy?A: We briefly discussed earlier that this is a very positive move and I wish that these kind of feedback prevails upon the promoters and promoters take these things in a wise counsel, they implement these things.Some mistakes have been done by the promoter, having realised that now they say that we are going to reverse the interparty transaction and that is good. Yesterday the delivery transactions, over one crore shares or 1.25 crore shares are marked for delivery and that data was not with us yesterday but I gather that the fund buying is happening in a very big way and post its inclusion in Sensex and Nifty about six months back, this is the only stock which has shown the negative or has eroded its valuation post its inclusion in Nifty and Sensex. So that thing is now getting corrected. Q1 numbers were good on fundamental basis, the expansion of cargo handling terminal at Mundra, Hajira, Ennore, everywhere things are taking place.So the rerating is happening in the stock and yesterday also I had said that I will not be surprise to see a price of Rs 300 maybe in next couple of months. But yes, continue to have positive bias even for this series till expiry with a rise of about Rs 285-287 cans be seen on the stock price in this series because of the kind of momentum, short covering and huge delivery buying as I said of 1.25 crore shares which we have seen yesterday -- all these data points to an upward momentum happening till expiry in this series as well.Latha: I wanted to ask you about Cipla. We saw this dramatic buying even after the numbers were somewhat tepid. Has this stock turned around the corner, your comments on Cipla?A: Yesterday also I expressed my view. I will not call these numbers as tepid because if you see, I am referring this on a quarter-on-quarter (Q-o-Q) basis, operating profit of Rs 450 crore against Rs 70 core loss in Q4. That means there is a change or maybe increase of Rs 520 crore with increase in the topline as well. So, that clearly sends the signal that there has been a dramatic turnaround and what I liked about the company for this Q1 is the working capital management, because if you see, for Q1, there were a lot of working capital issues, high inventories, high sundry debtors and all sort of things. So, the kind of operating profit of Rs 450 crore with a shift happening of Rs 520 crore because Rs 70 crore minus in Q4 turning out to be Rs 450 crore with topline also rising by about a couple of Rs 100 crore, Rs 3,300 crore, definitely gives the positive indications that maybe -- the share has been ruling at its 52-week low, I am not taking the theoretical low of maybe Rs 450-480. But it has been and it was under-owned, quite heavily short-sold, short-covering, renewed buying and the Q1 numbers were really quite good, with earnings per share (EPS) also on a consolidated basis seen at Rs 4.50 and change of guard at the top also have given a ray of hope that probably the managements are quite serious in taking the companies working on an improved scale going forward. So, all these things I have taken it in its positive stride.Anuj: Just one more word on public sector undertaking (PSU) banks, especially State Bank of India (SBI). Do you see more rerating on the upside for this stock?A: I do not think so because I am not impressed with any of the numbers. Let us not talk of one Indian Bank. Apart from that, I have not seen any kind of hopes coming in from any of the banks. The kind of run up which we have seen in case of Bank of India (BoI) or maybe one or two other PSU banks are more of technical in nature because even in case of BoI, you cannot say that the things are looking on a revival path or something like that.So, maybe just SBI seem to be having shown an upward trajectory or maybe an improvement in many of the parameters. As I have been repeatedly saying that two series, we have seen the positive behaviour of all PSU Banks and if you see the trading pattern of these stocks for the last one week or maybe since the start of the series, every alternate day, you see the profit booking coming in. So, maybe I will not be surprised to see the same trend continuing with a weak bias seen till expiry of the series on all PSU banks.Latha: Anything on J Kumar Infraprojects?A: Fear of the order cancellation which they have got of the metro, that is the talk going on and maybe some fear of the criminal proceedings against the company for the bad road, the saga, which has been going on in the municipality of which two or three officers have already been arrested. So, these two fears are keeping the stock quite weak for the last one week or so.Sonia: Any thoughts on how one should approach the aviation space now? Interglobe Aviation is up almost 2 percent and according to Citi, this as good a time as any to get into aviation stocks, because many of them have corrected quite a bit. What is your view?A: After seeing the results of Jet Airways and IndiGo, definitely I am not keeping a positive view on both the stocks. For quite a long time, I have been taking a positive call on Jet Airways, but looking to the Q1 numbers and coming on IndiGo, all these kind of fresh research reports, fresh buy calls will keep coming in, but more you indulge into the aviation stocks, more pain will be seen to your portfolio. So, better to remain away, but yes, you keep getting these kind of ideas that stock having corrected after 30-40 percent, you are bound to see these stocks moving up again by 4-5 percent. But as of now, I will not be keeping a positive view on any of the aviation stocks.