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Last Updated : Sep 15, 2016 05:49 PM IST | Source: CNBC-TV18

Tulsian's take on Yes Bank, Whirlpool, Jubilant Life and others

In an interview to CNBC-TV18 SP Tulsian of shares his views on the Reliance Communications-Aircel deal. He also shares his outlook on Yes Bank's stock after the bank called off its qualified institutional placement.

In an interview to CNBC-TV18 SP Tulsian of shares his views on the Reliance Communications-Aircel deal. He also shares his outlook on Yes Bank's stock after the bank called off its qualified institutional placement.

He discusses prospects for few other stocks like Hitachi Home, Whirlpool, IFB Industries and Jubilant Life Sciences among others.   

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

Sonia: The other stock in focus today has been Reliance Communication (RCom). Post the merger with Aircel now what would your view be for medium term investor?

A: Actually I have been expressing my view on the telecom stocks since the launch of Reliance Jio that I am very negative on all the telecom stocks. If you really take a call on this merger of RCom with Aircel honestly I don't find any changes or any improvements. I don't understand what is the reason to get enthused because people are talking that debt will get reduced, I am unable to understand that by transferring debt of Rs 14,000 crore from one pocket to another pocket can you say that the RCom debt has got reduced on a standalone basis that maybe so, but on a consolidated basis it is not because if you take a call on the merged entity now the merged entity will come into existence with a debt of Rs 28,000 crore.

Now though they have been talking of holding the second largest spectrum and all that but still if they want to participate in the auction of Rs 5.5 lakh crore which is scheduled the further capital expenditure (capex) will all be seen. Now the profitability of this company has been pathetic. If you really take a call on the cash flow or on the bottom-line we have not seen anything and that is the reason RCom all along have been ruling at a 35 percent or sub 40 percent of book value which is a very rare phenomenon that stock if has a potential is at 40 percent to its book value.

So, taking all this into consideration I don't understand when the giants like Bharti Airtel and Idea Cellular are unable to face the volatility or maybe the competition which is expected to be seen from Reliance Jio how this merged entity can really be seen facing and standing before them. So, overall negative view on the telecom sector and I am not impressed with these kind of things and as such if you really take a call for the last one year this merger has been talked.

Earlier Rs 10,000 crore by each partner was to get transferred which was raised to Rs 14,000 then we have seen two extensions having given. Then on 23rd June we have seen a press release coming in from RCom that we will be announcing this merger shortly and we are seeing that shortly getting implemented after three months. So, honestly if you really ask me I don't see any positive why we should be taking a renewed call on the telecom stock and particularly on this merged entity going forward.

Sonia: How much lower Yes Bank could head? It is already down about 15 percent since that Qualified institutional placement (QIP) news flow came through. Do you see lower levels compared to what we are seeing currently? It is below Rs 1,220 now?

A: It is getting to its support level or maybe bottom formation and I don't see any reason why it will fall below Rs 1,200. Because today there was some news that SEBI is looking into the glitches which has been seen in the QIP issue. So, yesterday's rally has got fizzled out but honestly if you ask me I don't find any reason because the long positions which were seen getting having created or maybe the momentum which was seen ahead of the QIP having built which made the stocks to move to a level of Rs 1,450 has already seen a correction having taken place of Rs 200-220. So, maybe if it corrects to Rs 1,200 one can take either as a trading position or as an investment call.

Sonia: Hitachi Home, Whirlpool, IFB Industries, generally start to spike up during the festive season. Any favourites here?

A: One can look for them because for multiple reason because of the good monsoon, the rural spending is going to be seen quite high then the pay packages having given by the central government is also seen to be spent quite a lot. But the kind of rich valuations which we have been seeing and generally what happens, take the case of air conditioning company like Hitachi or maybe like Voltas, Blue Star, we always see the best results coming in from them for the March and June quarter. But then the profitability fizzles out to a great extent. So, same thing may happen here also. We may see the good quarter coming in from the company because of the better dispatches seen for the September quarter. And then maybe for the December quarter as well. But the valuations are also seen quite stretched. So, I will not be too enthused with this theme of going into the consumer durable companies.

Sonia: Any thoughts on how to approach Jubilant Life Sciences Limited now. That stock has had a phenomenal run up until now, but here on what would your expectation be?

A: Actually this stock has almost doubled. In these last three months if you see we gave a buy call at Rs 310 and today the price is Rs 610. I remember of having given a buy call at about couple of months back. So, definitely I will advice to go for profit booking because maybe this run will continue on the upper side but if you are getting a gain of about closer to about 90-95 percent in about three months time there is no reason why one should not go for profit booking.

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First Published on Sep 15, 2016 05:49 pm
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