Tulsian positive on PSU banks, BEML

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com shared his view on stock specific ideas. Below is the verbatim transcript of SP Tulsian’s interview to Sonia Shenoy and Anuj Singhal on CNBC-TV18. Anuj: I wanted your thoughts on PSU banks first, Union Bank which is down 10 percent and Bank of India which is actually up 2 percent. A: You are right that Union Bank has been a disappointment but I think that should be taken as one-off. If you see the situation for Bank of India, I think there is no point in looking at half glass empty because probably one or two PSU banks may have disappointed and Union Bank falls in that category. However, if you take a call on Bank of India which falls in the top five banks, because if you exclude the State Bank of India (SBI) which is a nationalised bank or maybe even if you include that, SBI, Punjab National Bank (PNB), Bank of India, Bank of Baroda, they are the top four or five banks and if you see these kind of asset quality really seen coming in, I think that is commendable. In fact maybe in Union Bank as I said that is one of a case and in fact Union Bank was also seen ruling at a quite expensive level with a difference with cash segment ruling at a very high level, future ruling at a discount. So, probably the technical factors have also worked for a correction of about 10 percent today which we are seeing in Union Bank. However, overall I am very happy and keeping a positive view on PSU banks. Anuj: Is Jindal Saw a stock on your radar? A: One has to see whether it has any other income component or maybe the exceptional item. However, if these are from the core operations then definitely they are seen quite good. In fact if you see the saw pipes, submerge arc welded pipes, then you need to keep an eye on the Welspun Corp also because Maharashtra Seamless and all that, they are more into the seamless rather than the saw pipes. So, keeping overall because Ratnamani Metal Tubes and all that have posted good numbers, so, keeping a positive view on the seamless pipes and tubes also, but if the saw pipe industry that means the good consumption in the oil and gas sector is seen in the US and as such in US we have been seeing the revival in the shale gas also and the oil and gas business also. So, both are catering to the US market as well so one has to really understand or read the numbers in detail. Sonia: We have chatted about this several times, Bharat Forge, it has been one of your favorite stocks in the past, but if you had to pick between Bharat Forge and Motherson Sumi, both are going at a very strong pace, both companies key geographies in Europe are doing extremely well and in North America, which one do you think is a better bet at the moment? A: We have discussed yesterday on Bharat Forge and I have said that Q2 and Q3 were already known to be bit dull quarter as per the management commentary and since they have already opined very positive about the future scenario going forward, I think Bharat Forge is looking a very good buy. However, if I need to choose between two, probably I will be greedy because I won’t able to give my positive bias on the Motherson Sumi as well as on Bharat Forge also. So, both has it is characteristics, but in case of Bharat Forge, the trading opportunity seems to be available more to the investors where you can look to exit maybe in a rally of about 8-10 percent; take the case of maybe Rs 1,080-1,090, exit there and again look to buy on a fall of about 5 percent in a very short time of couple of weeks. So, trading opportunity is seen more with comfort and investment potential seen in both the stocks. Anuj: I just wanted your thoughts on BEML. The price action is telling us that we are moving closer to that strategic stake sale. How would you approach this stock now? A: I am keeping the positive view because if you see in the morning, there was bit confusion that the board meeting for Q3 has been delayed or maybe postponed by three days, but honestly either I will take that as a positive or I won’t be taking that as a negative. I don’t think that because the process of the induction of this strategic investor has already been initiated by the government and 26 percent out of the 54-55 percent stake held by the company given to the strategic investor will vastly re-rate the stock. So, yes, I am seeing this as a positive move and keeping a positive stance on the stock.