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Last Updated : Sep 21, 2016 08:03 PM IST | Source: CNBC-TV18

Here's why SPTulsian upbeat on Bajaj Finserv, Bajaj Finance

In an interview to CNBC-TV18, SP Tulsian of shared his view on textile, auto stocks. He also spoke on the NBFC and the jewellery space.

In an interview to CNBC-TV18, SP Tulsian of shared his view on textile, auto stocks. He also spoke on the NBFC and the jewellery space.

From the NBFC space he is upbeat on both Bajaj Finserv and Bajaj Finance

Below is the verbatim transcript of SP Tulsian’s interview to Sonia Shenoy & Anuj Singhal on CNBC-TV18.

Anuj: Your thoughts on the textile space today? We have seen huge gains in Vardhman Textiles which was news driven, Gokaldas Exports and some of the larger ones as well?

A: If you go by the newsflow for each company and coming on the Gokaldas Exports they are going ahead with merger of the subsidiaries. The wholly owned subsidiaries, because if you recall when the Blackstone acquired from Hinduja's ( not referring to the Hinduja Group of UK) at that time this company had many subsidiaries about 18/16 and each company was having the premises and all sort of things. Now in fact if you recall six months back when the stock was ruling at Rs 50-55 I gave an indication that Blackstone is looking to exit from the company.

We have seen the invocation of the pledge shares also where the promoter stake got reduced and this share touched to a high of Rs 120-125 may be two to three months back at that time again the sell call was given. So, this merger of the wholly owned subsidiaries is any relevant and this should trigger this kind of upmove on the share price. The financial performance is very important and if the stake sale happens by the Blackstone then definitely that will be seen positive.

Coming on Vardhman Textiles the things are looking good because of the buyback news having announced by the company. So, you have to take an individual call on each textile stock. However, the kind of run up which we have seen on many of the textile stocks and the kind of rise which we have seen in the cotton prices that is going to put some pressure on the margins of all the companies going ahead.

There are 15-20 stocks available in this space, but they are all seen ruling quite high whether you talk of the Sutlej Textiles or Vardhman Textiles or Donear Industries which have all been recommended. So, I won’t be taking a call on the textiles stocks now at this stage may be whether it is a spinning or may be integrated one like KG Denim or Nitin Spinners as I said there are many stocks available so I won’t be taking a call on the textile stocks at this stage may be a pause.

Anuj: The markets verdict today was interesting. In the morning Bajaj Auto was up 2.5 percent but now Eicher Motors is back to high point and in fact Eicher is at lifetime highs again. Do you think the kind of challenge that Bajaj is going to pose is not going to disturb Eicher Motors to much in terms of their leadership position?

A: I take the Rajiv Bajaj statement exactly on the line what we have seen couple of years back from TVS Motor in collaboration with BMW. Those bikes are now ready for launching and in fact I have been playing on this theme. If you recall I have always taken a positive view on TVS Motor in this last may be four or six months anticipating that launch is going to be seen from them. So, I don’t think that merely one statement and you will see that tomorrow it will get launched- day after tomorrow you will be having a big market share and on third day you will dis-launch the Eicher Motors or maybe the Royal Enfield.

Yes, we have been seeing some kind of momentum which is coming back which must be either because of the fund buying or may be the strong hands continuously seeing this upsurge happening. In fact this kind of upsurge we have seen on a sustainable basis in two auto stocks one is Maruti Suzuki and second is Eicher Motors. Don’t expect these kind of upsurge to happen - may be in Maruti it has happened 60 percent but even in Eicher Motors it has happened to the extent of about 30 percent in last two to three months. This is really phenomenal.

When the shares are bought by the strong hands then only you see this kind of sustainability because if you recall many experts have been talking on the Tata Motors also. The Tata Motors price or the rally has not seen sustaining for some reason or the other. If you really see Maruti when the yen was strengthening at that time everyone wrote off Maruti. Nobody was giving a buy call. In fact I recall so many short calls having been given by the technical experts between Rs 3,300 to Rs 3,800.

I don’t think that the valuations are really justified as of now in any two-wheeler including TVS Motor because TVS Motor is also ruling at its top end may be Rs 335-340. We have seen a good run up of about Rs 45-50 and same thing is happening with Hero MotoCorp.

If you really call this entry bikes and all that Hero MotoCorp has not made any announcements but the strength and the sustainability or the high prices are seen practically in all two-wheeler. I think that these kinds of momentum is unlikely to sustain and I won’t be taking the announcement of Rajiv Bajaj of launching high end bikes too seriously and that can amount to the re-rating of Bajaj Auto at this stage after having such a big run up.

Sonia: I wanted your thoughts on Edelweiss because that stock is now up 8 percent and has doubled since the start of the year, massive turn around here but any advice to investors on what one should do at this Rs 120 price?

A: I won’t advise fresh buying but I will advise to remain invested because three financial stocks if you really see, I am not referring them as an non banking financial companies (NBFCs) they are loosely called as a broking stocks one is Motilal Oswal second is Edelweiss and third is IIFL Holdings . In fact all three have shown a good kind of upmove in this recent past may be in this last three to four months. Actually, they should not be just called or termed as a broking stock because they have a significant presence.

Broking is just contributing a small portion, they are into the NBFC, they are into the home finance and the way they are growing. So, yes the hold is advised, in fact I have been taking a positive view on these three companies as well as on the Manappuram Finance and Muthoot Finance. These five stocks are really looking very good which have just shown a good remarkable up move in this last two to three months.

So, may be the advice is to remain invested, but one more think about these stocks are that they are showing a volatility also. So, if you are not too possessive with our stocks look to exit at a particular rate may be one can book profit and look to buy again at on a fall of about 4-5 percent which applies to all that is Motilal Oswal, IIFL Holdings and Edelweiss also.

Sonia: What about you on Bajaj Finserv itself, would you accumulate at these prices of almost Rs 3,200 or is it too steep?

A: Buy call on both the stocks Bajaj Finserv and Bajaj Finance, because Bajaj Finserv is again a holding company of Bajaj Finance and Bajaj Finance if you really see having corrected after the ex-split and ex-bonus, so that is we have seeing some kind of selling those who have gone for the tax planning and all those things, so even Bajaj Finance I am seeing it bottoming out, but yes the momentum which you have seen in Bajaj Finserv for the last maybe 3-4 months is likely to continue, maybe for next couple of months as well, so keeping positive view on both the stocks Bajaj Finserv and its subsidiary Bajaj Finance.

Anuj: Where is this move coming from for Indo Count even for PC Jeweller, but this Indo Count is really interesting the way it just surged?

A: If you recall couple of months back we have discussed when the Indo Count stocks found it used to rule at Rs 980-990 and in fact same view was expressed on PC Jewellers. Honestly, if you really ask me I want to be blunt I don’t understand the wisdom of including both these stocks into F&O because if you really see the kindly merely on the objective criteria of volume and maybe the turnover and all sort of things, sometimes these stock exchanges they include them, but these are seen really very hazardous for the traders, because they don’t realise, they don’t understand, they love to chase the volatility, they will buy when the stock suddenly moves up and they will exit when its start correcting and all sort of things.

I don’t think that these types of things are healthy, you need to have a fundamental view and I have always maintained that fundamentals of Indo Count have never convinced me and similar is the case with PC Jeweller and when you see this kind of volatility happening, maybe Rs 100-150 going away and again suddenly going up in one series that is really very bad and those things are not confirming or will satisfy any fundamental analyst.

Sonia: You wanted to make a follow on point.

A: Prakash has made a very good point that the mutual funds or maybe the institutions are holding investment in Indo Count continuing the same point, I am not disputing that in fact, I don’t want to name 2 or 3 mutual funds or institutions. In fact, sometimes you need to wonder or need to ask the wisdom of those institutional investors or maybe the mutual funds also that what has prompted them. I don’t want to name here in fact those reports and buying recommendations have also come to me through this one and all that at Rs 900 and all that.

Sometimes you need to question the wisdom of those funds, those who have been seen attracted toward this stock, are they just chasing the momentum or they are seeing the fundamental, so I agree with Prakash’s point which he has said, but I don’t think that volatility has anything to do with the funds holding the investment into the stock. In fact, when I talked to their one or two senior fund manager, they have candidly admitted even we are looking for exit, but we are seen stuck at the level of Rs 880.

In fact, you all must have come across the printed this rate, cost and all that that they have all been holding the share at Rs 880 and they are quietly waiting for that rate to come to enable them to take an exit, so I think this kind of momentum and this kind of things in fact sometime luring the fund managers also without looking to the fundamentals, which is really very bad.

Anuj: Are you tracking the development in BPL and the way that stock is surging?

A: I am not tracking the development, but you are right in saying that if you recall apart from the consumer durables, they were having into the mobile space also so that was history, but honestly I am not tracking the stock.


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First Published on Sep 21, 2016 08:03 pm
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