SP Tulsian‘s views on SBI, Tata Motors, PVR, Rel Comm

Speaking to CNBC-TV18, SP Tulsian of sptulsian.com talks about the fundamentals of companies like Tata Motors, SBI, PVR, Bombay Dyeing and Reliance Communication. Below is the transcript of SP Tulsian’s interview with Sonia Shenoy and Anuj Singhal on CNBC-TV18.Anuj: First a word on Tata Motors and Tata Motors DVR. At current levels, would you buy them? We have seen 11 percent surge now for the Tata Motors DVR stock.A: I may not buy at the current levels. I agree that the numbers of Q4 were really very good, but you have to keep a cautious view on the domestic sales going forward for the first quarter. I am not saying that domestic sales are significantly contributing to the operational performance of the company, but if you see in Q4, actually the JLR and the domestic, both have contributed and maybe any kind of sentimental effect can be seen and people will now take a relative valuation call on Maruti and Mahindra and Mahindra going forward because the kind of sales numbers which we will be seeing from all these companies from tomorrow onwards and actually in the near-term also, the stock has risen to its full value and actually generally, what happens when we see this kind of frenzy, the stock technically also goes in an overbought position were the smart investors like institutional and the funds, they book the profits to re enter at a lower levels of maybe 4-5 percent. So, considering this near-term view, maybe for one week or so, I do not think that stock can really move up further from here. So, maybe profit booking is advised or I will at least remain away from creating long positions.Anuj: I remember on the results day, you said that maybe the worst is over for SBI and in the context of all the PSU banks, it stands out. At Rs 204, is that still a good buy or do you think some correction will happen and that would be a better moment to buy?A: In fact, we have discussed day before and that time I said that yes, this is giving a good entry point, but what happens. Yesterday, we have seen the correction. In fact, you have referred that can we see correction and that was giving a good entry point and if you recall, I have said that I am expecting 8-10 percent upsurge in all the PSU banks. I am not talking of the smaller ones, but those who have a prominent presence in the futures and options, maybe like SBI, PNB, Bank of Baroda, Bank of India, Canara Bank, Union Bank, they all can give you that kind of returns. But what happens, generally, because people love to ride the momentum. When they see a price of Rs 202-204, which has already seen the stock having gone up by about 5-6 percent and then they enter at those levels. So, I do not think that by this way, you can make money. If you have the conviction, have a positional view and yesterday, in fact, was the giving good opportunity, but still I maintained that there is no SBI, the only bank which is available for making positions in F&O. If you have the conviction then probably the other PSU banks, the larger ones, the names which are just stated can give you a return of 5-8 percent from here on in this June series, because mind it, this series is of five weeks and I continue to have my positive bias from a technical angle, not a fundamental view, but from a technical angle on all these major PSU banks for this series.Anuj: What could be happening here? This is really a strange case. It was tough for Parag Milk to get through and now we are seeing big gains.A: Actually, we need to take the view on all these stocks for the next six months because in fact, this could just be seen as a big trap because I can give you umpteen number of instances where the momentum is seen happening for a couple of months by the informed circles or maybe those having interest. But I do not think on a valuation front, you can justify this kind of price rise, because in the past also, if I just need to remind you of the Inox Wind which immediately comes to my mind, I recall when the stock was listed, it went up to a price of Rs 400 and then that rally fizzled out after 4-6 months. In fact, when you sit and plot the price movement and price behaviour of these newly listed stocks. It is very dangerous. So, yes you need to be cautious. I do not think that the valuation justifies, the earnings justifies these kind of valuations.Anuj: A word on PVR. Almost at a new lifetime high.A: I will not be, because actually if you see this stock probably is now seeing the momentum and actually I do not think that on the valuation front you can justify these kind of valuations because if you really see the ticket pricing becoming expensive and actually if I just take a scenario in Mumbai city, the way things are, the alternatives are now available in the new complexes where you have the home theatres or for the members and the clubs and all that are starting these movies kind of things. When you talk to the people, definitely their visit to the multiplexes have got reduced. So, I do not think that things are really maybe on the momentum and actually I was not very happy with the numbers for the March quarter, though we may say that Yes, March is always seasonally bad, company having posted losses and the kind of expenses they carry, 15 percent rental, 10 percent electricity power, 10-12 percent salary and you cannot just afford to have the losses in one quarter on the pretext that there are no releases or the March quarter is always seen bad for the company and all though the company has posted an EPS of closer to about Rs 30 for FY16 on a consolidated basis, but the stock is looking quite expensive.Anuj: One more stock that I want to discuss with you is Bombay Dyeing. What is going wrong here because every day we are seeing losses in the stock and even right now as we speak it is down about 6 percent or thereabouts?A: I do not think that anything is going right for the stock because if you really see the kind of results, the company smartly presents that every March quarter they will show huge kind of amount coming in into the realty division, I do not think that one should really take the call on the textile or maybe on the DMT business which is continuously loss making. Actually people have raised a lot of hopes because of the 100 acres of land, they are holding in the Lower Parel and in Wadala where the development work is going on. But it is really very sad to see that in spite of the land cost being zero or the company having no considerable overheads as we have seen in case of other real estates in the form of maybe the selling problem or maybe in the form of the debt or the interest burden. I do not think that company will really be posting good numbers, because if you take a call on Q4 numbers, you will really get impressed with the realty division having posted very good numbers alone taken away or driven the whole Q4 numbers. But that will not get repeated in Q1, Q2 or Q3 either of the quarters. So, there is no consistency, there is no kind of comfort coming on the stock. Anuj: Rs 3.5 crore share build up in Reliance Communication today in futures market. What could be happening?A: Difficult to comment, but if you really see, people have that fancy of the low price stocks, but looking to the results and the way Aircel integration is getting postponed, first the company postponed it by a couple of months, then about two weeks back, they postponed it by one month and they have to monetise the tower assets which again people are, street is very apprehensive it is unlikely to happen because that is a condition precedent for merger with Aircel that they have to bring down their debt to about Rs 14,000 crore or maybe Rs 18,000 crore, I do not know because the terms keep changing. So, people are talking on the quality of the towers monetisations, also whether that will happen by June 22, for which the extension has all been given. But people love to buy because the kind of volatility which we see in this stock suddenly it goes up by Rs 4-5 and people probably is banking on that. But today’s weakness looks to be more because of the poor Q4 numbers seen from the company.Anuj: A word on Gokaldas Exports. It has met your target of Rs 85, if I remember correctly. It was circuit up today. Any fresh thoughts on this one? Any idea in terms of where the stock can go from here?A: If you see the performance of Q4, I am just taking purely the operational performance as seen coming in. Otherwise, everytime company had an exceptional gain on the sale of the real estate or the premises which they have been holding. And some because of the tax write back, the Q4 EPS is seen at double digit. Maybe Rs 11 plus. But I need to see that these kind of, let us not get confused that this double digit EPS for Q4 is because of the tax write back and I do not think that that is likely to happen. But even if it consistently posts an EPS of a quarterly EPS of closer to about Rs 4-5 and they can make an EPS in double digit of Rs 10-12 even that will be seen quite positive by the market. But yes, one has to wait for the results of Q1 to come in because continuously for the first time company has shown the operational turnaround and that must get sustained. So, maybe as you have rightly said that I was having a target of Rs 85-86 which has been met and I do not think that further upside is seen from here on in the share price. I will not be advising buying in the stock. If tomorrow it opens at a price of about Rs 90 or around those levels, those who are holding this stock can book the profits because we gave a buy call at the level of Rs 70 and it has moved to a level of Rs 86 with upper circuit seen today.