Prefer Hindalco over Sesa Sterlite: SP Tulsian

Written By Unknown on Selasa, 29 April 2014 | 18.01

SP Tulsian of sptulsian.com is of the view that one may prefer Hindalco Industries over Sesa Sterlite.

SP Tulsian of sptulsian.com told CNBC-TV18, "If you see the business model of Sesa Sterlite , it is deriving its strength from Cairn India and Hindustan Zinc. If you take their standalone business operation that is iron ore, maybe copper or maybe the other aluminum kind of business they have, I don't think that they have much of the income coming in from that."

"If you see the EBIT of the company, 90 percent is derived from the Hindustan Zinc  and Cairn India . So I don't think that one can take a very positive call on the stock beyond a level, which is about Rs 200 or so. That is in fact the reason if you take this 56-57 percent holding in Cairn India and 64-65 percent holding in Hindustan Zinc, the valuation of both comes to about Rs 72,000 crore while the marketcap of Sesa Sterlite itself is at Rs 57,000 crore. So it is ruling at a discount because of high debt of Rs 72,000-73,000 crore in the company on a consolidated basis," he added.

"I am not very comfortable with this stock. So I will advise that one should look to move to  Hindalco which seems to be a better non-ferrous play. So I will not advice to remain invested in Sesa Sterlite."


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