Poor RCapital results, IGL may touch Rs 325: Tulsian

Mon, Aug 13, 2012 at 08:51

Like this story, share it with millions of investors on M3Poor RCapital results, IGL may touch Rs 325: TulsianSP Tulsian, sptulsian.com, say that Reliance Capital results are not encouraging because of the increase in the interest liability as well as the non-improvement seen in the finance and investment portfolio where a major chunk of capital of the company is employed to the extent of Rs 10,000 crore.   .   Share  .  Email  .  Print  .  A+A- SP Tulsian, sptulsian.com, say that Reliance Capital results are not encouraging because of the increase in the interest liability as well as the non-improvement seen in the finance and investment portfolio where a major chunk of capital of the company is employed to the extent of Rs 10,000 crore.

The case is building up positivly in the favor of IGL . The Delhi High Court order has been very clearly in the favor of IGL. So I am expecting a positive outcome. If the order comes in the favour of IGL then the stock may move to Rs 320-325.

Below is the edited transcript of his interview to CNBC-TV18.

Q: What is your view on Reliance Capital's numbers and how you would expect the stock to react today?

A: The numbers are very numbers. On standalone and consolidated things are confusing. On standalone, due to increase in interest PAT is down by Rs 70 crore and mark-to-market losses of Rs 55 crore. But on the consolidated numbers, the EBIT shown by the finance and investment division stands at Rs 25 crore for this quarter.

I am referring against Rs 100 crore plus losses. So if you have capital employed of Rs 9,000 crore in finance and investments on a stand-alone basis and close to Rs 11,000 crore then one is unable to understand what is happening because this consolidated operations where Rs 2,000 crore are employed in the finance and investment division are helping the company in presenting the balance picture.

One may see dull or flat result soon a consolidated basis or maybe the flat result. If one makes the analysis, stand-alone results have been very bad. PAT or PBT is down by about Rs 125 crore largely because of these two factors but that gets adjusted largely in the consolidated operations because of that EBIT finance.

In my view the results are bad because of the increase in the interest liability as well as the non-improvement seen in the finance and investment portfolio where a major chunk of capital of the company is employed to the extent of Rs 10,000 crore.

Q: What is your view on IGL?

A: The case is building up positivly in the favor of IGL because the notices have been issued by the Supreme Court to PNGRB and now the case will be heard. I don't think that much relief is expected by the PNGRB order in favor of PNGRB. The Delhi High Court order has been very clearly in the favor of IGL. So I am expecting a positive outcome. If the order comes in the favour of IGL then the stock may move to Rs 32-325.

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Q1 GDP at 5.6%; Bullish on Sesa Sterlite: Tulsian

The GDP has already been downgraded or revised lower by various agencies by 5-6%Stock analyst SP Tulsian of sptulsian.com explains to CNBC-TV18 that the latest IIP data reveals a very disappointing scenario and estimates that the GDP for the first-quarter is likely to be at 5.4 - 5.5%.

Tulsian is very bullish on Sesa Sterlite, the merged entity from the Vedanta Group as it combines a huge array of the businesses such as crude, iron ore, zinc, copper and aluminum under one roof which makes the company a formidable presence in the industry.

Below is an edited transcript of the analysis on CNBC-TV18.

Q: What have you made of the results posted by Tata Motors ?

A: I don't think that there is any disappointment. If you analyse the performance of the margins and JLR and add the forex losses of Rs 440 crore, I don't think there is any room for disappointment.

But the kind of run-up in the last couple of weeks due to the results may not provide a fresh trigger for the stock to move beyond the current levels and profit-booking may come in.

An observation of the overall trend of the market indicates a shift in preference in the automobile sector towards Mahindra & Mahindra which announced results on Wednesday.

So, profit-booking may probably continue and the stock may slide back to Rs 220-225 where renewed buying will step in. So, in technical terms some weakness will come into the stock, but I don't think that there is any complaint from the results which will not act as a trigger for the stock to move beyond the current levels.

Q: Are you worried about SBI 's asset quality?

A: I was not expecting this kind of weakness from the results. But if you see today, maybe after one o'clock, the kind of correction in the stock price probably indicates a sense of caution or expectation of negative surprises from the bank’s results. If there is anything that could throw up a negative surprise, it has to be asset quality.

So taking cues from the behaviour of the share price, especially after after one o'clock, there is an increased sense of caution. But yes, it is essential to keep a watch on the results, which may offer some negative surprises.

Q: Pantaloon management has accepted the slowdown in the business and has estimated that it could continue for a while. Would you be circumspect about the stock now?

A: The caution or maybe the pessimism remains on the stock as the June quarter is a lean season for the retail segment. The recovery may start from September because of the festive season. But this candid confession was very much expected from the management due to the lull and discount prevailing in the retail segment.

There are no expectations of any improvement in the margins or in the performance of the core operations and now the entire focus is on measures that will be initiated to reduce thee debt.

The interest burden in this quarter has risen by about Rs 30-35 crore on a sequential-basis has dampened the results with a flat bottom-line, if exceptional income of about Rs 260 crore is excluded. So, obviously the sense of caution will continue to remain on the stock until there is fresh monetisation of assets and properties held by the company which will result in reduction of debt.

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No hopes on Chidu; banking, auto are best bets: Tulsian

Mon, Aug 06, 2012 at 17:58

Like this story, share it with millions of investors on M3No hopes on Chidu; banking, auto are best bets: TulsianStock-analyst SP Tulsian of sptulsian.com explains to CNBC-TV18 that he is not hopeful that finance minister P Chidambaram will implement any initiative that will have a positive impact on the market and the economy.  .   Share  .  Email  .  Print  .  A+A-I don't think the rally has been caused by a rise in the GRM of Reliance IndustriesStock-analyst SP Tulsian of sptulsian.com explains to CNBC-TV18 that he is not hopeful that finance minister P Chidambaram will implement any initiative that will have a positive impact on the market and the economy.

Tulsian is also bullish on banking and automobile sectors and adds that a trading view could be taken with a time horizon of 15 to 20 days.

Below is a transcript of the analysis on CNBC-TV18.

Q: What is your view on Reliance Industries after today's sudden spike?

A: I disagree with Udayan attributing the surge to improvement in the refining margins. There no changes in the petrochemicals business which was adversely hit in Q1. There has been a slight improvement in the Singapore benchmark, but I don't attribute that as the sole cause for the stock to move up.

I estimate the rally to be caused by the reduction in number of floating stocks as the company continues its process of buying back shares along with the fall in selling pressure. Another cause could be the news of the rapprochement between the brothers and the takeover of RComm .

So this surge has to do with expectations of corporate development which are likely to happen either within the group or outside it. I don't think the rally has been caused by a rise in the GRM (gross refining margins) of Reliance Industries.

Q: Would you recommend Wockhardt on the astronomical rise in the stock?

A: Considering the results, definitely the stock looks quite exciting. An extrapolation of the EPS of Rs 35 posted for the quarter will obviously result in a positive call.

But the kind of run-up seen in the stock and having recommended the stock at Rs 300 in February, I sometimes get a little cautious. The three-digit level could really be good for entry as whenever there is profit booking, the stock corrects to Rs 50- 70.

The company's performance is at its peak considering the results posted in the first quarter. So, I don't think that growth in the overseas operations can really be expected in the second quarter.

I will hold my call on a fresh entry-level into the share. Investors holding the stock can continue to hold on, but for those planning to make a fresh entry,  a price in three-digits will make a good entry-level.

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