Tulsian's view on Yes Bk QIP, Mahindra CIE deal, auto cos & more

In an interview to CNBC-TV18 SP Tulsian of sptulsian.com shares his view on auto stocks, what concerns him about Gujarat Flouro's business and whether Yes Bank will have to revise its QIP pricing to attract more investors and make it a success.  Below is the verbatim transcript of SP Tulsian's interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18.Anuj: I remember you were bullish on Maruti at, but at Rs 5,000 you thought it may be running a bit too much, but it is not stopping, what that’s telling you about the markets likely right now?A: You have to work as per your conviction and maybe as per the target you have set, because if you recall you have touched upon the yen concerns, when the yen was weakening, everyone has been taking a negative call on Maruti and at that time they have all been going positive on Tata Motors. I am not saying that Tata Motors has not performed, but if you have bought a frontline stock like Maruti, on the frontline stock generally any prudent investor or any expert will not expect more than 15-20 percent return on a yearly basis and if you have got a return of maybe about 60 percent in about less than three months, I don’t see that why one should not book profit if they bought maybe at Rs 3,200-3,500 whatever it is, you are getting a gain of 50 percent or so.It is difficult to catch for the top for any company or for any stock, but if you see today the auto stock, I have heard you a while back saying that Bajaj Auto, Hero Moto and Eicher Motors all three have touched the lifetime high, but I don’t know whether it has been slipped on your part even TVS Motor is in the same category and if you all recall even that stock got corrected to Rs 280-290 post its Q4 and Q1 numbers and I have been keeping my positive stance on auto and auto ancillary stocks all of them. Maybe, the preference was different. I am not keeping that positive stance on Hero Moto and Bajaj Auto, my preference was more on Eicher and TVS Motor, but all of them have performed well.Maybe in comparison to Maruti and Tata Motors both have performed well, I am not trying to justify but if you see the relative performance probably the gain which we have seen in Maruti in this last 3 or 4 months vis-à-vis Tata Motors maybe higher in case of Maruti. So, yes you have to book at some point of time and you will not keep your money ideal at that point of time, you will definitely be shifting to some others stocks, so maybe profit booking is always advice in the market and that to if you got that profit of 50-60 percent in a frontline stock in less than 3-6 months, because on a similar line if you recall yesterday, we have discussed similarly on the for Yes Bank also that almost having doubled post my recommendation in this calendar 2016, we needs to book profits and you have seen the stock correcting today by about Rs 60-80. So, what my point is that you always get an opportunity to buy it at a lower level if you are keeping your funds idle or you look for the other ideas. I have never regretted for having booked the profits if that profit is of about 30-50 percent in less than 6 months or so.Sonia: Any thought on Gujarat Fluoro?A: The problem with this stock is that they have these two division one is of chemical and second is of wind energy and that second division of wind energy or power division is always being disappointing and that is not liked much by the market. I don’t know the reason of having this to unrelated business in this company, so maybe one has to analyse but on prima facie or optically the numbers are not looking good.Anuj: You spoke about Yes Bank yesterday as well, of course, it has been your favourite stock and you said yesterday also some profit taking on that, but what about this qualified institutional placement (QIP), could there be a risk of for the management having to revise QIP price, is the risk of that happening, if we see more selloff in the stock and we believe the QIP is still not 100 percent subscribed?A: I don’t think that that will be required, that revision or maybe downward revision of the price if that happens then that will definitely be seen bad on part of the merchant banker as well as on the issuer, that is Yes Bank both. Because generally these type of people they themselves are the financial advisors and if they are unable to manage their own issue, that will be a bad precedent or maybe a slap on the face of both merchant bankers as well as the issuers. So, I don’t think that this likely to happen, because generally in case of such a big issue, where it has been planned, they won’t be tapping the capital market maybe for next couple of years or maybe even next 3 years.I don’t think that this will really be happening that downward revision will be seen. They must have done their homework well. They will be able to convince and satisfy their prospective investors even this kind of a small fall. Generally, ahead of the QIP issues, we generally do see some kind of market making also happening. I am not trying to say that this is intentional or this happens just because of the market forces, so I won’t be taking it too seriously, but the idea of profit booking yesterday advice was considering this also that ahead of the QIP generally you see the stock peaking out and after the stock corrects by about maybe 5-8 percent, but this has happened on the eve of the QIP which is seen big negative or a bit concerning.Anuj: If you heard the story both from Anisha and Sonia, you have a call on Mahindra CIE, I know Bharat Forge is your top pick in the auto ancillary space and of course we have in the past discussed a lot of other stocks as well that you like, but on Mahindra CIE what’s your call?A: Again positive view because for 2-3 reasons, because firstly Mahindra promoter, secondly auto ancillary, third any kind of inorganic growth is seen quite positive and the kind of demand which we see for castings and forgings in the automobile sector and the quality one. The things are really looking quite promising and that’s the reason, we have in fact chosen 1 or 2 forging casting stocks also on the smaller space, so if we see this kind of things happening in Mahindra CIE, definitely I have a positive view on the stock.Anuj: I just wanted to ask you if followed what’s happening with MBL Infra, if you followed that stock, it has been very volatile, a few days back it was on down circuits, for last couple of days it has been on upper circuit.A: Maybe, day before it touched a 52 week low at Rs 62 and today I think if I am not mistaken it is ruling upper circuit at Rs 83-84, that means they have shown a rise of about Rs 22 in just 3 days that is 6, 7 and 8, but yes coming on that because when the stock was hitting lower circuit for 3-4 days, I don’t recollect, at that time there was some kind of rumours that the company has been raided by the income tax department, but that was unconfirmed news. Honestly, if you really ask me what was the reason of such a fall, because a good weakness was seen continuously for about a week or so, but honestly for last couple of days, it has turned and it has risen by about maybe 30 percent as I said from Rs 62-63 it has moved to Rs 84-85 just in last 2 or 3 days.Sonia: I also wanted to quickly ask you about IRB Infra, because that is one of the other stocks of the day up almost 10 percent. Its infrastructure or its investment trust has filed for an IPO now, any thoughts on how to approach that one.A: I am not keeping a very positive on the stock, because this kind of momentum which we see gets fizzled out very quickly. This has happened in the past also, but yes in context to the capital raising programme and all that it is difficult to comment, but I won’t be taking a buy call or a positive view on the stock after this rise of 10 percent.Anuj: We have not discussed IRB Infrastructure yet. That stock was up 10 percent today. We discussed that, but as a story for IRB Infra from here on, do you see more traction? Do you see the stock maybe gaining another 10-15 percent from here?A: Honestly, I do not see any trigger for the stock to really which can make the stocks to move beyond a point. And that is what is happening. In fact, if you see, I do not think that I have any complaint with the Q1 numbers also which the company has posted or maybe for FY16. But nothing fresh is coming in for the company because past 2-3 months back we have seen that cancellation of order that was created or negative perception on the stock. But on a great prospect or as a fresh positive trigger, honestly, I do not find anything on the stock and that is why I have been keeping my neutral stance on the stock.