Moneycontrol
Last Updated : Feb 07, 2017 07:08 PM IST | Source: CNBC-TV18

Tulsian pleased with Q3 performance of Future Retail, MRPL

In an interview to CNBC-TV18 SP Tulsian of sptulsian.com gave his outlook on BHEL, Amtek Auto, Future Retail and MRPL.

In an interview to CNBC-TV18 SP Tulsian of sptulsian.com gave his outlook on BHEL, Amtek Auto, Future Retail and MRPL.

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

Anuj: I wanted your thoughts first on BHEL, what have you made of the numbers and the rally that we are seeing?

A: I won’t be justifying the kind of rally which we have been seeing into the share price because if you see the core business, the core business has shown -- power segment has shown an EBIT of Rs 590 crore against Rs 505 crore on the stagnant turnover, I am referring quarter-on-quarter (QoQ). However, if you see the industrial, it has shown an EBIT loss of Rs 118 crore and one needs to understand what is the reason of such a big loss coming into the other minor segments, one.

Two, if you see the order book having slipped below Rs 1 lakh crore which is a psychological figure, that means the inflow has not been matching with the execution. Three, if you see the interest liability having come to the company in this quarter of Rs 26 crore against Rs 5 crore on QoQ basis, maybe that could be in respect to the banking charges and all that non fund based activities and all that. However, whether the company has given some kind of guarantees and all that on which they may have incurred the guarantee charges and all that needs to understand.

So, taking overall perspective, one may say that things are looking better because these numbers have been better than the provisional one what the company have announced. However, I won’t be justifying the kind of rise which we are seeing in share price correlating this with the numbers having posted by the company.

Sonia: I wanted to check your view now on Amtek Auto because the latest we hear from the management is that before the fiscal closes, the sale of the German subsidiary will take place. However this is a promise that we have heard for many months now, would you put your bet on it this time because the stock is up almost about 10 percent?

A: That is right and in fact if you recall couple of months back, we have again discussed and at that time I have said that the sale is looking certain, the Tekfor sale is going to happen. Now let me add here two points, what is the consideration we are expecting because now the market has started betting on USD 1 billion, I have my doubts that it can fetch that kind of valuations. USD 1 billion, if it happens, let me not build the very big hope for the investors in all these stocks because if Amtek Auto moves then you see four other stocks also moving in the same line - Castex Technology, Metalyst Forging, and JMT Auto as well.

Firstly let me tell you that I am not relying too much on these timelines because this probably may be the fifth or sixth timeline having given by the management that they will be completing this deal. However, so as to coincide with the financial year end and looking to the huge pressure of the banks, because the group is having a debt of closer to about Rs 17,000 crore, I hope that this time if it goes through and if it is at -- I am giving the eventuality, I am expecting it to be at a valuation of USD 650 million, the Tekfor stake sale. If it happens at USD 1 billion then obviously this will be extremely positive.

However, again let me caution all the investors that all these companies are hugely loss making. So, let us not try to punt on these news alone that USD 1 billion will be fetched and we plunge into the stocks by buying them, number one. Number two, you have couple of months still lined up maybe since the company says that financial year then probably it may happen even till the middle of April as well. So, again let us not jump on the conclusion. Probably if you don't have the conclusive sale happening, you may see the term sheet getting signed, due diligence process, at least the effective step will be seen having taken by this one.

However, the stake sell in Tekfor is seen over due and in fact the promoters, those who have assured that they will be reducing the USD 1 billion term loan not from Tekfor alone and while I am referring to the Tekfor valuation expected to be at about USD 600-650 million. If they are able to reduce the debt buy USD 1 billion from their domestic assets also, plus the personal stake held by the company in their retail outlets and all sort of things, so, that will be seen positive. However, as I said, I am not taking it too seriously, so, let us not take this as a buy call. If you all want to punt, you can all go, that means the trader and investors if they want to punt in a small way, they can always go.

Sonia: I also wanted to ask you about Future Retail because the numbers over there looked pretty good, the profits almost doubled this time, stock has surged and that stock has come back into the fancy of a lot of investors, any thoughts?

A: Excellent numbers and it reminds me of the promoter, Kishore Biyani saying that for first three-four days they have seen a problem and thereafter they have seen a good growth and actually the statement given by Kishore Biyani is seen loudly and largely getting reflected into the Q4 numbers. I am highly impressed with the numbers shown by the company.

Sonia: From the list of result reactions that came out today, MRPL was the one I wanted your view on. Good numbers, EBITDA has surged, any thoughts on how to approach that one?

A: Very good numbers and in fact I am impressed with the numbers. If you see, they have broken the landmarks on the topline Rs 15,000 crore on a quarterly basis, on a operating profit if I include the other income, that has moved plus Rs 1,000 crore and probably this may be their best quarterly performance with an EPS of 3 plus. If you see on all parameters, the company has performed well. So, I am quite impressed and in fact this kind of performance was expected after we have seen good numbers from Chennai Petroleum. So, maybe market still will receive it well going forward.
First Published on Feb 7, 2017 07:08 pm
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