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Coal India Future Bright; No Diesel Hike Soon: Tulsian

  • In his analysis of the day's market on CNBC-TV18, SP Tulsian of sptulsian.com, expects the bidding war on IVRCL to intensify and attributes Ranbaxy's 6% rise to Daiichi's move to delist loose stock. He soothed investors' fears on missing an opportunity on Dish TV and indicated that the future was bright for Coal India.Tulsian adds that he did not foresee a hike in diesel prices in the next few months. He was postive on Reliance and neutral on Cairn and negative on ONGC.

  • Q: Do you expect a bidding war on IVRCL ?

  • A: On Wednesday morning there was an indication of a benign situation with the backdoor being opened to the Essel Group. Now this seems to have taken a hostile air. I think the war is going to get more heated with IVRCL's BoT projects.

  • Institutional investors hold close to 45% stake and I don't know how much homework has really been done by the Essel Group to convince or influence these FIIs.. So if you take all these things into account, I don't think the hostile bid is going to come to an end quickly.

  • Q: Why is Ranbaxy up 6% today?

  • A: I don't know. Maybe Daiichi is again initiating a move to delist loose stock. If that happens, if you can rely on that news, then the share has good upside potential.

  • Q: Have investors missed the bus for Dish TV ?

  • A: I don't think that there is any question of missing the bus. If you observe the trend for Dish TV, a few months ago it moved to about Rs 70-72. But when we took an extremely bullish call, the stock fell to about Rs 54-55.

  • When Dish TV was a very compelling buy at maybe at Rs 56-58, investors didn't enter and tried to ride the momentum. So there is no question of missing the bus, because a negative view on the April series has the probability of stocks again slipping back to Rs 56-57 - an ideal purchase level because there are many stocks which are very safe for entry at lower levels.

  • Q: How do you think Coal India will pan out? No consensus was arrived on FSAs at the board meeting.

  • A: I think ultimately the FSA has to stand. If you take a broader view, ultimately we are concerned about 50 million tonnes of production. Coal India has a production of 450 million tonnes.

  • Coal India moved from useful heat value to gross calorific value system from January 1, 2012. It's so difficult for Coal India to ramp up production because the extra 50 million tonnes needs to be provided to the power generator by March 2015.

  • So it is inadequate even if you have a normal increase of 5%-6% in production every year. A coal washery alone can solve that problem.

  • I don't understand why the structural issues are not solved at the Coal India level. Are we talking of the stagnation of the production of Coal India at 450 million tonnes over the next 3 years?

  • A lot of hue and cry has been made on FSA and about the severe penalty if the 80% supply is not made. So, I don't think that this is really such a serious issue.

  • On the other side of the coin, setting a production which factors in an increase of about 5%-6% per year could prove beneficial and is very much feasible. But the environmental issues need to be sorted out. All issues are going to get amicably resolved and could be positive for the stock in the future.

  • Q: There is just one more day to go before the end of the Budget Session. Do you think that diesel-price hike coming soon?

  • A: I have my reservations. I don't think that the hike in diesel prices could really come in the next couple of months. The only focus of the oil marketing companies will be first to go for the petrol price hike and the quantum will decide if the hike is Rs 4-Rs 5 or Rs 6 per litre.

  • Q: There was distinct trend in this series was the sell-off in oil and gas be it Reliance , Cairn or even ONGC . How do you see the prices on Reliance and Cairn move?

  • A: I maintain my positive view on Reliance largely because the buyback is likely to get initiated or the share buyback process will accelerate from hereon.

  • On Cairn, I hold a neutral view and on ONGC probably, the outlook is negative because the government will accelerate or follow the directives of issuing credit notes to upstream companies in Q4.

  • In Q1, Rs 12,000 crore was spent on credit notes, in Q2 it was Rs 6,000 crore and in Q3 it was Rs 12,000 crore. I won't be surprise to see credit notes worth Rs 25,000 crore being issued by ONGC in Q4 to oil marketing companies.

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