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Last Updated : Sep 16, 2016 06:08 PM IST | Source: CNBC-TV18

Tulsian's take on 2-wheeler cos & Orient Paper's demerger

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com explains why he likes the two wheeler space. He also explains why it is now the best time to book profits on TVS Motor. He talks about Orient Paper's demerger and shares his views on its restructuring.

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com explains why he likes the two wheeler space. He also explains why it is now the best time to book profits on TVS Motor. He talks about Orient Paper's demerger and shares his views on its restructuring.

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

Sonia: Stock wise the stock of the day in the broader market is Wockhardt Limited. 10 percent higher and huge volumes there. Our sister channel CNBC Awaaz was talking about the possibility of the Chikalthana facility getting the US Food and Drug Administration (FDA) clearance. We haven't got any confirmation from the management. But you track the stock closely. At this price of Rs 900 how attractive does Wockhardt Limited look?

A: I have heard this news of Chikalthana unit getting the US FDA clearances on the channel as you have elaborated. But if you recall I have been for a while been saying that the flow if US FDA clearances will start with the company difficult to give a timeline probably your sources may have gathered that the Chikalthana plant have got the clearances but I have three plants lined up, Chikalthana, Waluj and Shendra and I think all three could get this US FDA clearances in the next couple of months or maybe in the next three months. This is what I have been saying for a while. We have discussed this in the last maybe fortnight two-three times or maybe in last one month 2-3 times and I am maintaining quite a positive view on the stock because if you really see the culprit the company has not been able to make any kind of growth in the US market. On the contrary there has been de-growth.

If this Chikalthana which I think contributes more than 50 percent to the company's production then the things will really start on a very big way and if the US FDA comes in for Chikalthana as I said then next will Waluj and then thereafter third would be Shendra. Then the concurrent clearances which will start coming in if that is seen happening as I said even without any timeline even if one plant of Chikalthana gets the US FDA approval that can really be a very big booster and I am setting a price target of maybe Rs 1,100 to Rs 1,150 if this Chikalthana plant gets the US FDA clearances the moment we get to hear this news from the management, the confirmation from the management. Market will not wait for the financials to get reflected into the working, they will just go ahead with this kind of surge in the share prices on getting the confirmation from the management.

Sonia: We were discussing two wheeler space last week and you did mention that stocks like TVS Motor are seeing higher levels. Is this a space that you like and any stocks that you would invest into here?

A: Definitely I like the two wheeler space but you are right amongst the three or four stocks which we have available like Bajaj Auto, Hero MotoCorp, Eicher Motors and TVS Motor. I have taken a positive call on TVS Motor. In fact all have risen but if you see the relative growth or rise in the share price of TVS Motor it has moved from Rs 285 to maybe Rs 335-340. But honestly if you really ask me you are 15 days away to see the monthly numbers coming in for the month of September. I don't think September sales will really be so great because you have the Pitru Paksha having started from today and the 15 days which expires on 30 September you will be having the lower off take of the vehicles, whether you talk of four wheelers or you talk of two-wheelers. So, I won't be keeping my near term positive view and those who have gone and bought earlier on the recommendation I will advice profit booking because you may get all these four shares maybe at a lower level of 3-4 percent which is quite good for a trader as well as for an investor.

Latha: Any views on Orient Paper itself. The stock has run up very well in the past one year?

A: I am not happy with the contours in which they are going for the demerger because if you read this the electrical division is transferred to the wholly owned subsidiary and sometimes I don't understand the intention of the management, sometimes you see them retaining 51 percent in the holding company, sometimes it is getting transferred to completely 100 percent subsidiary does it mean that they want to exit from the consumer electrical business because the land is attracting even to the promoters also. So, the existing company and the land transfers and all that there are a lot of hassles and lot of cost and expenses are involved. So, I can presume that the intention of the company maybe to capitalise the electrical business and that is why it is transferred to the 100 percent subsidiary. If this would have been transferred with the swap ratio having given with the same share to the same set of shareholders then it would have been see quite positive because paper sector as such is doing quite well. The existing business of paper in which they have a capacity of closer to about 1 lakh tonne is already supporting this but I am not convinced on the company and I am not convinced with this restructuring move.

Sonia: I remember you were most positive on this stock during listing day and from the listing price of Rs 1,200, it is now up 30 percent. At Rs 1,600, does this still offer value?

A: In fact, I have taken a positive view on three initial public offerings (IPO) I distinctly remember, Ujjivan Finance, Advanced Enzymes and RBL where the views were not very positive seen from any of the analysts and post listing also, I have called all three as a screaming buy. And I continue to have my same view because if you see the Advanced Enzymes, the best part is the enzyme which they are making, 70 percent is catered to the nutraceutical sector and that has a very good potential with pricing power because if you see the other global giant, they are more into the industrial enzyme and today, I have heard the management saying that how the things are getting or likely to get replaced or the chemicals are likely to get replaced by the enzymes in nutraceutical sector and that is going to be very big. Obviously, it all depends on the breakthrough which the companies will achieve and it is not so easy that those breakthroughs can get achieved in just a couple of months or maybe a couple of quarters. But if you see the working of the company or the pipeline which they have, it is very robust.

And as I said, 70 percent of the topline coming from the nutraceutical sector, actually that is a call of the global, that is a global phenomena that wants to replace the enzyme in the nutraceutical sector with the enzyme instead of chemicals. So, I am keeping my positive stance on the company with a medium to long-term. Those who are getting this kind of gain of 30 percent which is not small in just couple of months, they can go for profit booking but if you can keep a longer horizon of 1-2 years, this is an excellent stock to have in the portfolio.

Reema: Did you see the news flow on Deepak Fertiliser and the gas issue over there? What is your sense on Deepak Fertiliser now?

A: Positive news, but I will not be taking this too positive. It is a mild positive because Deepak Fertiliser is into the chemical space though it is called as a fertiliser company, but they are making very least fertiliser but more of chemical which are having a very high realisation and gas being their raw material, that will be seen positive. So, let us wait for the management commentary, but I will taking as of now, a mild positive move for the company.
First Published on Sep 16, 2016 06:08 pm
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