SP Tulsian reviews Future Cap, Tata Steel, Jet Airways

In an interview to CNBC-TV18 SP Tulsian of sptulsian.com shared readings on stocks across various sectors like Future Capital , Tata Steel , Manappuram Finance .

Below is the edited transcript of Tulsian’s interview with CNBC-TV18. Also watch the accompanying video.

Q: What did you make of that block deal that we saw in Future Capital and now from hereon in anticipation of that stake sale going through how would you approach the stock?

A: The plot is being prepared for 56% stake sell-off by Pantaloon because they seem to be hard pressed. There is no other option. Couple of names have surfaced like Deccan Chronicle and then Warburg Pincus, I think this time the deal is likely to happen. It will be interesting to see at what price it happens because the broad range could be taken anywhere between 160-175. If that happens then it will give good relief to the company.

They will be able to mobilize a good chunk of money. The only thing that matters, is how it will be responded by the market. If you see an amount of Rs 700 to Rs 750 crore, which can be expected maximum from this 56% stake whether considering the debt burden of Rs 7-7.5 crore of Pantaloon group will definitely be taken positive, but to what extent it will be difficult to take a call, But, overall it is positive for Future Capital and Pantaloon Retail in the near term.

Q: There is TISCO that happened post market hours what do you expect to hear from this time around, any shockers like the last quarter or this will be a stronger set?

A: I don’t think that there is any confusion on the domestic front. If you take the standalone I think the same kind of bottomline which has been posted by the company for Q3, Q2 at about Rs 1500 crore PAT will be reported. Disappointment will be coming on from the global operations.

I don’t think that except in any other heads whether you take the freight charges or the employees or any other things where we have seen a normal increase of about 2% on a sequential or on a YoY basis. But, the real problem came in from the raw material between Q3 and Q2 where we have seen an extra burden of Rs 900 crore, which has resulted into a negative bottomline for Q3.

I am quite scared on the global operations and I don’t think there is any kind of relief coming in from the global operations. On a consolidated basis though  predications are showing a slight dip in the EBITDA margin, but I am quite scared about their global operations. I am not expecting any kind of relief. Raw material cost which was at 52.5% for Q3 is likely to get increased by about 100 bps in Q4.

Q: Manappuram General Finance is down close to about 5%, they will be announcing numbers today- are we expecting a negative surprise from there?

A: That is likely because if you see the share price movement Muthoot Finance has not given us any negative surprise, but Manappuram is likely to give. The market has been very apprehensive on the performance of this company because of regulatory actions and slow growth. Probably, the share price is indicating that we may see negative surprise post results.

Q: Anything on Jet Airways or Spicejet or a Kingfisher Airlines ?

A: The noise of FDI in airlines is hitting up and it is likely to happen in the next couple of weeks maximum next two to three weeks. So, that is a positive cue been taken by the market on all airline stocks. This positive view is likely to continue atleast for sometime maybe a rise of about 5-8% on the stock like Jet Airways and even Spicejet and Kingfisher Airlines can move up by about 10% plus in this next one week or so.