SP Tulsian, sptulsian.com is betting on infrastructure and fertiliser sectors ahead of the budget. According to him, the government will have a compulsion to look into both these sectors.
Below is a verbatim transcript of his interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy.
CNBC-TV18: How would you go into the budget, would you go positive? Today, the market seems to be betting on some of the infrastructure stocks hoping for some usual infrastructure sops, a bit of the fertiliser stocks with their leg up, would that be a safe bet to go ahead of the budget? Would it be a good idea to go long on these stocks at all?
SP Tulsian: Yes. If I just go into the history, whenever we have not seen the pre-budget rally, which generally happens seven out of ten times, we have seen the post budget rally or may be better sentiments prevailing after the budget. So, maybe this year we are likely to see that scenario.
Going by the sector specific, infrastructure and fertiliser look to be the two sectors where the government will have a compulsion to look into. The kind of food inflation or the food shortage, which we have been seeing, probably there will be radical announcements and the incentives are likely to be given to the agricultural sector, in which fertiliser will definitely stand to gain, number one.
Number two, infrastructure have been lagging behind for quite sometime largely because of the concern on the hardening interest rate and the less capital inflow for that sector. So, maybe more of the fund allocation from the government, more clearances of the project and more incentives to mobilise the funds, either by the infrastructure lenders or maybe the other institutions will definitely be there in the budget.
When you look at the infrastructure sector, they are virtually ruling at their bottom. I don’t think there is much downside left from hereon. One can safely take a call on these two sectors, considering budget in the mind.
CNBC-TV18: The investor has 400 shares of TVS Motor at Rs 71 and time horizon of six months. What is your view?
SP Tulsian: If you go by the present trend in the two wheeler industry, I think the growth is very much intact. TVS management has hinted a growth of 12-15%. We can safely assume that it is likely to be upper end of 15%. If that kind of growth is posted by the company, we are expecting an earning per share (EPS) of close to maybe close to Rs 5 plus or may be Rs 5.50.
As we have seen the fall in the share price from Rs 82 to now ruling at Rs 52-53 levels, I do not think there is much downside left. For investors who have bought at a higher price maybe at around Rs 70 levels are advised to keep a view of three-six months. One has to wait for the budget. There are talks of excise duty hike in general. But I don’t think that is likely to come. Even if it happens, that will have largely be impacting the entire sector. I am holding my positive view on the stock. There is no point in exiting now at these levels and moving to any other stock because stock itself has its own fundamental. So, I advice to keep a view of three months on the stock.
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