Brookfield-RIL’s east-west pipeline deal is interesting, says SP Tulsian

Market expert SP Tulsian shared his views and outlook on various stocks.

Talking about the rollback in the cement prices, he said, “I think this should be used as a buying opportunity. In the southern region, the prices rose very sharply by about Rs 50-60 per bag which was unwarranted because cement companies have been enjoying the advantages of the lower petcoke prices and the softload prices which they otherwise have faced the headwinds in the Q3. So they should have been a little gradual. Though I agree that the southern region has been witnessing a cement consumption growth of maybe double digit of 12-14 percent against Pan India of 8-10 percent so that should have been gradual. The kind of surge which we have seen in the cement shares in these last two weeks is bound to see some kind of pause or consolidation or profit booking. So we are not worried about this small rollback of Rs 10-20 per bag which is warranted and because of the steep rise which we have seen and this should be used as a buying opportunity because the tailwind is seen for the sector at least till June 30th, you have a good consumption. Even the announcement of the elections with the code of conduct in place will not affect because already the orders are in the pipeline which needs to get executed. So keeping positive bias on the cement stocks going forward.”

Speaking about Brookfield-RIL’s east-west pipeline deal, he said, “I will see this as an interesting deal. I won’t call it as monetisation. In fact, I feel that this should be taken more as leasing out by RIL to Brookfield InVIT for 20 years. I agree that the capacity has been reduced from 56 mmscmd to 33 mmscmd and there are various caveats as long as they realise the price of Rs 76 per mbtu and maybe with operating of 22 mmscmd, RIL will not have to pay anything. I presume that it must be the pipeline because the data points are not available on a standalone basis. So I presume that it must be operating at a 22 mmscmd at present. So RIL will not have any other obligations, they will be receiving Rs 13,000 crore. Apart from that they have kept their Rs 4,000 crore- they will be realising their equity investments – invested as a form of preference shares in this company and after 20 years, they will take the entire asset for Rs 50 crore which seems to be very positive.”