Why SP Tulsian won't buy Axis Bank stock even at reduced levels

In an interview with CNBC-TV18, SP Tulsian, sptulsian.com explains why he would not prefer buying Axis Bank even at reduced levels. He also tells why one must book profits on Sharda Cropchem rather than wait for further gains.Below is the verbatim transcript of SP Tulsian’s interview to Latha Venkatesh and Anuj Singhal on CNBC-TV18. Anuj: Since in Midcap Minute Reema Tendulkar talked about Sharda Cropchem this has been a multibagger and you had identified this stock for our viewers. Would you recommend profit taking here or continue with the gains? A: I will advice profit booking and in fact I have shifted my focus on UPL post that Advanta merger having announced and already taken place. That is the old news, 6-7 months back when the merger was announced and that was already been implemented. The problem with Sharda Cropchem is now I am seeing more of a momentum. In fact lot of funds are seen invested in this. If you really take a strict fundamental view on the company you may not get convinced that except for that they are owning all the branch and they have a very good global presence and maybe because of that they are enjoying. They don't have any fixed assets, but they are holding the intangible assets. While in case of UPL now with merger of Advanta the company has become an integrated player in seeds and agrochemical both. So, yes looking into today's momentum in Sharda Cropchem I advice profit booking and I will advice people to shift to maybe Rallis India limited or UPL looks better now as compared to Sharda Cropchem. Latha: L&T Finance Holding after seeing a dip has now once again started climbing. Do you like it at current levels? A: I like in fact all the Non-Banking Financial Companies (NBFCs) and yes, L&T Finance Holding actually having run in this last four-five months have been taking a pause but if you really take the situation going forward L&T Finance Holding may not be able to perform the kind of returns which we will be seeing from the other NBFCs which I stated in the morning also that like maybe Ujjivan Financials, Muthoot Finance, Manappuram or maybe Bajaj Finance those four are looking as good prime pick for me in the NBFC space. Anuj: Any thoughts on Tourism Finance, that is up 15 percent today? A: I won’t advice chasing this momentum because this is news based that Rakesh Jhunjhunwala fund has bought this stock. This has seen a good run up and when you have heard the management, they have said that there is no improvement seen in the NPA though they have given a positive direction on the disbursement fund or maybe increasing the loan book but they have not given any hopes or positive signals coming in on the recovery front or maybe the asset quality front. So, I won’t be keeping the positive view now after share having seen such a big run up. Anuj: Any construction stock that you like at current levels? A: I am unable to interpret the general word construction, whether we are talking of the construction and developer that is the real estate company or the pure EPC player. If you take a call, I am keeping positive stance on the developers also because the commercial space has started seeing the revival now. In fact particularly in the Mumbai city, when you talk to three or four developers, they have been posting a very good situation prevailing on the commercial fronts. The lease business is really improving and that is in fact tempting the investors or the high networth individuals (HNIs) to buy the premises and lease it out because that is giving them yield of anywhere between 6-8 percent. However, the residential has to yet pickup. So, if you want me to take a call, I may be taking a positive call on stocks like HDIL and Indiabulls Real Estate coupled with DB Realty also as a developer. In the construction space, if you say that construction that means this is pure EPC players, where I will be taking a call on maybe stocks like PNC Infratech or maybe KNR Construction kind of stocks. Anuj: United Spirits has also started to move but we have seen a big rally in some of the smaller ones, Radico Khaitan itself is doing well. Any stock that you like in this space? A: I won’t be taking a buy call now because earlier I had given a buy call on maybe Globus Spirits but if you specifically talk for Radico Khaitan, it has remained quite dull maybe for last couple of years. In fact you can add Radico Khaitan and Tata Global Beverages both, both have not performed in this last two or three years and suddenly this stock has been seeing momentum. I don’t know whether any corporate news are really seen building up at Radico Khaitan or not but I won’t be taking any buy call because if you see the Bihar issues having for the sentimental reason all the stocks have seen gone quite high, maybe Empee Distilleries, Globus, GM Breweries, Radico Khaitan. However, if you take a call that Bihar liquor ban is continuing, on Kerala again there has been no news of the liquor ban getting revoked by the government and all sort of things, so, maybe in the current situation I won’t be taking and if you really see the kind of prices of the ethanol, maybe of the molasses being in the short supply, the prices of the raw material will keep increasing from here on. So, I won’t be taking a buy call. Maybe once the prices correct by about 10 percent, then one can give a relook to the stocks. Anuj: Axis Bank has now corrected about 16 percent from the top. I know you haven't liked this stock; you have Kotak Mahindra Bank and YES Bank as your picks. A lot of money has moved from Axis do you see further downside from here? A: You are right that I have never kept positive view and if you see this SUTTI stake sale and I don’t think that for the time being that is very much as a big negative seen or big headwind seen for the stock. If you see the performance, you are right that I have never liked the stock and I don’t think that any kind of fresh trigger are seen which can make me to review my call by taking positive view. If you have the additional stocks available in the private sector banking space I have added three or four names in that space – one is Lakshmi Vilas Bank, second - Federal Bank and third is RBL Bank that is new listing which has happened. So, I won’t be honestly looking to go for this bank, Axis Bank even at the reduced level. Latha: I forget to ask you about cement stocks. They have given very good gains this year, but would you want to stay with any of them? Want to shed any of them? A: I will continue to hold all the cement stocks because for the simple reason that the take off time has started now. The only apprehension could be the quarter two numbers which are likely to be bit muted because of the monsoon may be lower off take or may be some margin pressure. If you take the next nine months scenario may be till June 30th of 2017 I don’t think that you are going to see any kind of headwinds coming in. Whatever cost increase will be seen will get passed off and even the off take the volume off take will give them the good operating leverage. So, in fact I am keeping my positive stance on all the cement stocks. However, may be the midsized cement stocks which we have discussed two to three days back also they could be kept on radar may be like Century Textile, Kesoram Industries, NCL Industries, Deccan Cements they are all looking really very good.