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Last Updated : Feb 22, 2017 10:51 AM IST | Source: CNBC-TV18

Here are some top trading ideas by SP Tulsian

In an interview to CNBC-TV18's Latha Venkatesh, Sonia Shenoy and Anuj Singhal, SP Tulsian of shared his reading and outlook on the market and also gave recommendations on various stocks.

In an interview to CNBC-TV18's Latha Venkatesh, Sonia Shenoy and Anuj Singhal, SP Tulsian of shared his reading and outlook on the market and also gave recommendations on various stocks.

Below is the verbatim transcript of SP Tulsian's interview to Latha Venkatesh, Sonia Shenoy and Anuj Singhal on CNBC-TV18.

Sonia: The stock I wanted to discuss with you is ITD Cementation. The stock has had a brilliant run, it has doubled in the last 12 months but the results over the last few quarters have been disappointing, how would you react to that?

A: That is right that the results have not been able to keep the pace with the kind of run, which we have seen in the share price. However, I do not think that one has any complaint for Q2 numbers because of the monsoon season and they are into this specialised type of engineering, procurement and construction (EPC) contracts. Probably that gets accepted but Q3 also or the December quarter has also seen a bit disappointment or maybe I would call it as flattish kind of scene. So let us hope that things will improve going forward but yes, the results for the last two quarters have not been able to keep pace.

Anuj: The other stock that we were just discussing, IDBI Bank, what are your thoughts on that, how would you approach it?

A: If you see in case of IDBI, I remember when the public issue came in since then the assets, which the bank is owning have always been taken as a matter of pride. I don’t want to mention those specifically the IDBI tower at Cuff Parade and all that, that was the kind of valuation when the initial public offering (IPO) came in maybe about a decade back by the merchant bankers and all that.

Coming on the monetisation, this is overdue if you see in the balance sheet about Rs 35,000 crore kind of assets are shown as I am not referring to the advances and the treasury investments. So the monetisation of -- I don’t think that even Rs 5,000 crore will be sufficient as indicated by Kishor Kharat, MD & CEO of IDBI Bank that they are looking to monetise about Rs 5,000 crore. That need to accelerate the things because the kind of non-performing assets (NPA) which you have seen in the books of the company, 13-15 percent on gross and 10 percent on the net seems to be quite high and Q3 number has deteriorated the situation further on the asset quality front.

So maybe the process of asset monetisation has to get accelerated and I think that this is the move having initiated now by the government on a larger scale because if you have seen the IFCI also yesterday having announced that five regional offices are getting merged with a strict timeline of May 18. So that must have been at the base of the government that be fast and the kind of move which we have seen in case of Bank of Maharashtra, IFCI -- I hope that asset monetisation happens in the first half of FY18 itself because that warrants the situation and maybe Rs 5,000 crore is looking too low for IDBI Bank.

Latha: I also wanted to ask you about now speculation that an upstream oil company will be merged with a downstream so Oil and Natural Gas Corporation (ONGC) plus Hindustan Petroleum Corporation Ltd (HPCL) or ONGC plus Bharat Petroleum Corporation Ltd (BPCL), how should investors approach all these speculations?

A: One may have a contradictory opinion -- take the case of ONGC. ONGC is 10 times bigger of Oil India in the upstream space that I am referring to.

Take for instance if ONGC acquires Indian Oil Corporation (IOC) which is again 55-60 percent of all oil marketing companies (OMCs), you will be seeing a big giant getting created then who will absorb HPCL and BPCL. So I don’t think that there is any rationale in merging the OMCs and the exploration.

In my view, it should always be exploration and it should always be OMCs. So logical move should be that Oil India gets merged with ONGC because there is no point in having Oil India, which is exactly or maybe 10-11 percent of the size of ONGC in terms of their oil production, profitability and financial performance.

Coming on the other three oil marketing companies, IOC controls about 50-55 percent of the total outlets maybe about 27,000-28,000 outlets and in terms of financial performance while HPCL and BPCL -- though BPCL have some exploration also in their portfolio -- controls about 45-50 percent in terms of the oil marketing. I have never been the fan of merging exploration with the OMCs. It would be logical if all the OMCs gets merged.

Take the case of MRPL with ONGC. That can get merged with OMC, that is a different case but I do not think that this will be a logical move of merging one exploration company with one OMC.

Latha: Your take on the telecom companies?

A: The pain for telecom companies will continue to remain there. Even if from April 1, because this was known that Reliance Jio cannot keep on giving the indefinite free kind of services given to the customers but if you heard the statement of Mukesh Ambani yesterday, 20 percent more that means Reliance Jio is very clear that let other telecom companies come out with any offers, we will mash them on 20 percent better rate. That is one.

Number two is if you see the kind of plans they have offered, they still are looking quite attractive, so the policy of Reliance Jio will be to retain the 100 million customers because it was known that if the rates are not offered on an attractive level, many of them will not be going ahead with the renewal plan.

So I am not keeping on the positive stance even people have been talking of this Idea and Vodafone merger -- the second largest player that will emerge -- even they will be having tough time because two large entities will not be able to turnaround the financial performance.

In Vodafone you have a debt of Rs 40,000 crore, in Idea you have a debt of Rs 35,000-40,000 crore and Bharti Airtel is already with a debt of Rs 80,000 crore, people have been talking of Reliance Jio also having a debt of Rs 1,10,000 crore. So all of them are looking on a similar level now even on this corporate event merger.

Reliance Jio seems determined that they will keep the aggression in the price war for next one year also starting from April 1, 2017, which will be seen as a problematic things for the existing telecom players.

Anuj: Rs 1,117 on Reliance Industries, your thoughts?

A: Two things -- firstly because the clarity of revenue generation or revenue inflow has seen from April 1, so market has taken it very positively. That is number one.

Number two is I have always been taking a neutral stance on Reliance Jio. For the simple reason that the company has seen a customer of 100 million and I hope that 90 million gets converted into the paid customers also. From hereon, definitely the pace of additions will slow down. I have been taking that Rs 75,000 crore should be the revenue under 150 million should be the customer. That will take a very long time.

So maybe for FY18 because now since the clarity is in front of us, the company starts generating and if you have heard the statement of Mukesh Ambani in the annual general meeting (AGM) having given earlier, he has indicated an annual revenue of about Rs 5,000 coming in from each customer which we will now be seeing coming in which will be anywhere between about Rs 3,600 to Rs 4,000 per year. So maybe I will keep my neutral stance definitely the visibility of the revenue and earnings have started coming in on the stock from April 1 but I will not be raising my positive stance from Reliance Jio contributing to the profitability or the bottom-line of the company.

Latha: The offer-for-sale (OFS) of 5 percent of Bharat Electronics Ltd (BEL) is on. That stock is down 2.5 percent, what would be the advice to investors?

A: I will advise to grab this because the discount of 5 percent is offered to the retail investor. Let us not look for the near-term weakness. This BEL and BEML both are excellent stocks and this is giving an entry to the retail investors those who wants to have it in their portfolio.

(Reliance Industries, which owns Reliance Jio, also owns Network18, which publishes Moneycontrol.)

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First Published on Feb 22, 2017 09:14 am
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