SP Tulsian, the veteran stock picker, is known for his ability to pick multibagger stocks. There are several occasions where the stocks recommended by him have become multibaggers and given heavy gains to investors.
Sonia Shenoy, the editor of CNBC TV18, is highly experienced in the matter of how to identify top picks.
SP Tulsian was asked by Sonia Shenoy to recommend his top picks of stocks to buy which will give investors multibagger gains.
SP Tulsian recommended stocks
Buy ITD Cementation as the stock has doubled in the last 12 months and the weakness is temporary
One cannot have any complaint for the Q2FY17 numbers because of the monsoon season and they are into specialised type of engineering, procurement and construction (EPC) contracts. The results for the last two quarters have not been able to keep pace.
Let us hope that things will improve going forward.
Buy Motherson Sumi as the acquisition is positive
I have always kept a positive view on Motherson Sumi for the last couple of years. I am not capable to take a call on the acquisition whether it is expensive or not. On a shallow analysis having made, I do not find this acquisition expensive.
I have always seen that the inorganic growth strategy of the company has always been very strategic and very prudent.
Motherson Sumi will not be aggressive or slipping just merely to meet the target of 2022 which they have given. So, keeping confidence that this Finland acquisition really of about Rs 4,000 crore should really prove to be EPS accretive and beneficial to the company.
IDBI Bank – Asset monetization to solve NPA problems
In the balance sheet about Rs 35,000 crore kind of assets are shown as I am not referring to the advances and the treasury investments. So the monetisation of — I don’t think that even Rs 5,000 crore will be sufficient as indicated by Kishor Kharat, MD & CEO of IDBI Bank that they are looking to monetise about Rs 5,000 crore.
The non-performing assets (NPA), 13-15 percent on gross and 10 percent on the net, seems to be quite high. The Q3FY17 number has deteriorated the situation further on the asset quality front.
The process of asset monetisation has to get accelerated. This is the move having initiated now by the government on a larger scale. IFCI yesterday having announced that five regional offices are getting merged with a strict timeline of May 18, 2017.
The asset monetisation happens in the first half of FY18 itself because that warrants the situation and maybe Rs 5,000 crore is looking too low for IDBI Bank.
Merger of Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL)
ONGC is 10 times bigger of Oil India in the upstream space.
If ONGC acquires Indian Oil Corporation (IOC) which is again 55-60 percent of all oil marketing companies (OMCs), you will be seeing a big giant getting created then who will absorb HPCL and BPCL.
There is no rationale in merging the OMCs and the exploration.
It should always be exploration and it should always be OMCs. The logical move is that Oil India gets merged with ONGC because there is no point in having Oil India, which is exactly or maybe 10-11 percent of the size of ONGC in terms of their oil production, profitability and financial performance.
As regards the oil marketing companies, IOC controls about 50-55 percent of the total outlets maybe about 27,000-28,000 outlets and in terms of financial performance while HPCL and BPCL — though BPCL have some exploration also in their portfolio — controls about 45-50 percent in terms of the oil marketing.
It would be logical if all the OMCs gets merged.
MRPL can be merged with ONGC.
Reliance Jio and the telecom companies
The pain for telecom companies will continue to remain there. Even if from April 1, because this was known that Reliance Jio cannot keep on giving the indefinite free kind of services given to the customers but if you heard the statement of Mukesh Ambani yesterday, 20 percent more that means Reliance Jio is very clear that let other telecom companies come out with any offers, we will mash them on 20 percent better rate.
If you see the kind of plans they have offered, they still are looking quite attractive, so the policy of Reliance Jio will be to retain the 100 million customers because it was known that if the rates are not offered on an attractive level, many of them will not be going ahead with the renewal plan.
Vodafone has a debt of Rs 40,000 crore, Idea has a debt of Rs 35,000-40,000 crore. Bharti Airtel has a debt of Rs 80,000 crore. Reliance Jio has a debt of Rs 1,10,000 crore.
No buy or sell of Reliance Industries – Neutral stance
The clarity of revenue generation or revenue inflow is seen from 1st April 2017. The market has taken it very positively.
Reliance Jio has seen a customer base of 100 million. If 90 million gets converted into the paid customers also, definitely the pace of additions will slow down. I have been taking that Rs 75,000 crore should be the revenue under 150 million should be the customer. That will take a very long time.
So maybe for FY18 because now since the clarity is in front of us, the company starts generating and if you have heard the statement of Mukesh Ambani in the annual general meeting (AGM) having given earlier, he has indicated an annual revenue of about Rs 5,000 coming in from each customer which we will now be seeing coming in which will be anywhere between about Rs 3,600 to Rs 4,000 per year. So maybe I will keep my neutral stance definitely the visibility of the revenue and earnings have started coming in on the stock from April 1 but I will not be raising my positive stance from Reliance Jio contributing to the profitability or the bottom-line of the company.
Rakesh Jhunjhunwala Latest Portfolio
Buy Bharat Electronics Ltd & BEML
Investors should grab Bharat Electronics Ltd because the discount of 5 percent is offered to the retail investor.
BEL and BEML both are excellent stocks and this is giving an entry to the retail investors those who wants to have it in their portfolio.
Sintex – sell as results likely to be bad in the future also
Sintex reported poor numbers. It has two divisions, textiles and plastics. Textile has not disappointed. On the plastic, there has been a drop in the sales and the margins. Sales is more or less seen intact, but there has been a sharp decrease in the margin of the plastic business because of the high increase in the polymer prices and plastic division. They have not been able to pass it on. And it seems that they have a poor inventory management..
So, the core business of Sintex is getting affected to a great extent. There has been a big disappointment on the margin front. The trend of the polymer prices having gone up, if that situation continues, then definitely for the first half of the January month also will be seen negative for them.
So, taking this big dent on the margin of the core business of plastic, I am highly disappointed with the Sintex numbers.
Hold Adani Power
Adani Power was a big disappointment because in spite of having booked the compensatory tariff of closer to about Rs 200 crore plus, the number are very disappointing.
Buy Orient Paper, Trident, International Paper APPM
Orient Paper numbers optically look bad but are excellent because in the paper division, the earnings before interest and taxes (EBIT) has almost doubled to Rs 16.17 crore against Rs 8.25 crore on a sequential basis. The disappointment has come from the electrical consumer division where the EBIT has fallen to Rs 64 lakhs from Rs 6.62 crore.
Trident paper division has performed very well. International Paper APPM have posted excellent numbers and then again these good numbers from the Orient Paper.
Jain Irrigation – Hold
Jain Irrigation could be the victim of the increase of polymer prices which they may not have been able to pass on.
Buy PSU Banks
Canara Bank numbers are good because the increase in the net NPA has just risen from Rs 21,900 crore to Rs 22,300 crore.
Optically, 6.72 percentage of net NPA is looking very high, but that increase is just three basis points. As long as their bottomline remains positive and even if they have the return on assets in spite of not having booked too much in the treasury income.
That gives the hint that top-four or five banks like Bank of India, Bank of Baroda, Punjab National Bank, State Bank of India should not disappoint looking to the numbers of Canara Bank.
The stock tips offered by SP Tulsian during his discussion with Sonia Shenoy are very useful for investors. Acting on such tips is always a very prudent investing strategy.