Buy stocks of SKS Microfinance with target of Rs 190-195

“We should see micro finance bill also going through and with the model changing for micro finance companies especially SKS Micro it should be positive going ahead. In fact, I have been positive on SKS Micro ever since we saw those levels of closer to Rs 90- since then I have been recommending that stock and every time I have been upping my target and now my target is about Rs 190-195 for SKS.”


The company's trailing 12-month (TTM) EPS was at Rs 15.43 per share. (). The stock's price-to-earnings (P/E) ratio was 11.48. The latest book value of the company is Rs 43.07 per share. At current value, the price-to-book value of the company was 4.11.

Sell stocks of TCS, HCL Tech.

“IT should be utilized to sell. Whenever we see that bounce back and we saw that bounce back in the last two months despite poor results from some of them. But December quarter results will still be poor or maybe poorer than what we saw in September.”

“At these levels one should be exiting stocks like TCS and HCL Tech. Infosys anyway I have been negative for the last six-seven months. Wipro , I don’t think because of that news Wipro should move up, anyway that belongs to that segment which is going to be demerge. I don’t think Wipro should move up because of that news.”

Buy stocks of Dr Reddy

“Dr Reddys has come in our buy list repeatedly. It is a buying opportunity even at current prices.”


He further added, “It is very gratifying to see the PSU banks do well. For the last two weeks that has been the most underlying theme that I have been giving on the channel that PSU banks are the next sectoral opportunity. The way to play is in three-way. There is still steam here. Ideally you want to buy these stocks when they have a pause. There is no sense in running after them, but there is more upside left. So the three-ways you can just trade the Bank Nifty. Go for individual PSU banks and third if there are Exchange-Traded Funds (ETFs) which are created only for PSU banks. So if there is enough liquidity buy a PSU bank ETF.”

Buy stocks of Jet Airways

“Jet Airways is something that I would now avoid. It needs to go through a very deep correction before it becomes a buying opportunity again. But jet’s charts are excellent. They promise and suggest much higher levels. As a tactical decision this is not a buy at current levels.”


He further added, “There is no short selling opportunity anywhere in the Nifty except for some stray counters. Bharti Airtel is going through a correction. The rally itself was a little overextended and the correction is not over yet. So the sense will come when it corrects and completes its correction to go and buy it again. That will take a bit of time.”

Buy stocks of HDIL

“I have been taking a bullish call when HDIL was Rs 70 so I think that continues. I have also explained that HDIL, Indiabulls are the two real estate favorites. Both have done well in their own ways. I think the question is should we be buying HDIL at current prices and the answer would be for a short-term trader, for a momentum trader, yes even at current prices there is the prospect of another upmove. That upmove can be captured. Just be careful because the markets are choppy, but there is an opportunity.”


He further added, “All the IT majors are looking disappointing. So the trade here is not to take any buying call, not to try to buy these falling knives and stay away. They require a lot of consolidation and a lot more effort before we can say okay; this sudden onset of declines that they have come into is over. At this point it is an avoid.”

Buy stocks of eClerx Services; target of Rs 910

eClerx:-

“eClerx is a leading provider of data analytics, data audits and related services to global enterprise clients across industries. After its listing at the beginning of financial crisis in January 2008, the stock price has seen extreme movements. First it slumped towards its all time lows around Rs48 and then embarked upon a spectacular multi-fold rally during 2009 to July 2011 to hit its life-time high of Rs875. Post the July 2011 high, the stock embarked upon a year long correction to hit lows of Rs570 by June 2012. This price decline has occurred in a well defined mildly declining channel formation as highlighted in the adjoining weekly candlestick chart. Recently, the stock price posted a bullish upward break out from this falling channel around Rs740 accompanied by rising volumes.”

“From a technical perspective, this is a bullish signal for future price movements. According to the classic theory, price implication of a channel breakout is measured by adding the price range of the consolidation to the breakout level. In this case, the range of the channel (774-600 = 174 points) added to Rs740 projects the price target of Rs914. We expect the stock price to scale to its projected price target with some temporary hurdle in the vicinity of its life-time high of Rs875 levels. During the recent climb, the stock price has marched above its all medium and long term moving averages and is forming rising peaks and troughs indicating a bullish trend. Among momentum oscillators, the 14 week Relative Strength Index (RSI) has climbed upon its bullish territory indicating strength from a medium-term perspective.”

"Accumulate eClerx in a staggered manner in the range of Rs 770-787 for a target of Rs 910 with a stop loss below Rs 714 on a closing basis,” Says ICICIdirect.com research report.

Buy stocks of Supreme Infra; target of Rs 365

Supreme Infra:-

“Supreme Infra has registered revenue growth of 32.2% yoy to Rs. 4,362 mn, showing the execution strength of the company. This strong execution was seen in the road projects viz., Manor Wada Bhiwandi, Ahmednagar Karmala and Panvel Indapur. During the quarter we saw a decline in EBIDTA margins which stood at 16.1% down by 59 bps yoy, primarily due to higher construction expenses as a percentage of sales which went up by 929 bps yoy at 82.1%. during the quarter PAT margins were down by 183 bps yoy at 5.9%, primarily down due to rise in borrowing cost by 74% yoy and rise in effective tax rate by 600 bps yoy at 28.0%.”

“The present order book stands at Rs 43,758 mn including L1 of Rs 9,996 mn which stands at 2.9x FY12 sales. During the quarter SIIL, added orders worth Rs. 11,456 mn. The closing order book has been divided into 50% road, 7% bridges, 1% railway, 37% building, 5% water and balance power. The Company has achieved the financial closure for 9 BOT projects except for the new 10th road BOT project bagged (Kotkapura-Muktsar Road) during Q1FY13 in JV with SPML Infra based out of Punjab. Of the total 10 BOT projects currently 3 projects are operational viz-Kasheli Bridge Patiala Malerkotla and Nagar Kopargaon. During FY13 the company will have 1 Road BOT viz Manor wada Bhiwandi which is expected to get completed and start the operation. Total Equity requirement for 10 road BOT projects is Rs. 7,500 Mn of which Rs 3,800mn has been infused by Supreme Infra while; 3i Capital will infuse Rs. 3,060 mn and balance Rs.640 mn to be infused over the next 36 months by the company.”

“The company is well poised to capitalise on the opportunities of govertment spending on infrastructure. In view of the growing order book, efficient execution of ongoing projects, backward integration and improving track record, we expect the company’s top line to grow at a healthy CAGR rate of ~21% during FY12 to FY14E. At current market price of Rs 278 the stock is trading at a P/E multiple of 4.4x and 3.6x to its FY13E and FY14E EPS of Rs. 63.8 and Rs. 76.4 per share. We maintain buy with a target price of Rs. 365 per share with an upside of 31% based on SOTP method. For the construction business we arrive at a price of Rs 319 per share which discount FY13E EPS of Rs 63.8 by 5x. For BOT projects viz., Manor-Wada-Bhiwandi (MWB), Kasheli Bridge (KB), Nagar Kopargaon (NK) and Patiala Malerkotla which are valued on DCF basis which gives a NPV of Rs 46 per share,” says BP Equities research report.

Buy stocks of J Kumar Infra; target of Rs 219

J Kumar Infra:-

"J Kumar Infra has registered a subdued revenue growth of 2.9% yoy to Rs. 2,110 mn during Q1FY13 primarily due to slower execution of projects. Execution is expected to pick up in the 3rd & the 4th quarter of FY3. Management has guided a topline of Rs. 12bn for FY13.  During the quarter EBIDTA margins went up by 100 bps yoy to 15.8% primarily due to reduction in raw material cost as a percentage to sales by 249 bps yoy to 77.5%. JKIL has backward integration model which has helped them to maintain higher margins. Management has guided a EBIDTA margin of >15% during FY13.  PAT margins for the quarter remained flat at 7.3% yoy mainly due to rise in interest cost as a percentage to sales by 44 bps yoy to 3.1%. Management has guided a PAT margin of >7% during FY13. Average cost of borrowings for the company during the quarter stands at 12-13%.”
“Order book of the company as on 30th June 2012 stands at Rs. 48.4 bn (including L1 order of Rs 8bn) which translates into 5.2x FY12 sales. The order book comprises of transportation engineering - 85%, irrigation - 2%, civil construction - 13% & piling work - 1% as on Q1FY13. Geographical break up of order book stands at Maharashtra - 53%, Delhi - 33%, Rajasthan 11% & Gujarat 3%. Order book from the govertment clients stands at 69% while that from the private clients stands at 31%. Recently the company secured a prestigious award from DMRC for Delhi MRTS project phase III worth ~Rs. 14 bn for design and construction of tunnel by shield TBM, tunnels, stations and ramp by cut & cover method. The order has been secured in JV with China Railway Third Group having 26% stake while the balance 74% stake is held by the company. For this project the company is expecting a EBIDTA margin of ~15% and a PAT margin of ~8-10%. The projects are expected to get completed in ~36-42 months.”

“We expect the company to register a CAGR of ~30% from FY12 to FY14E on the back of healthy order book and strong execution track record. At the CMP of Rs.185, the stock is trading at a P/E of 5.9x & P/Bv of 1.0x to its FY13E EPS of Rs. 31.2 & BV of Rs. 189.5 respectively. We recommend buy and assign a P/E multiple of 7x (20% discount to peers’ average) to its FY13E EPS of Rs. 31.2 and arrive at a target price of Rs. 219 which provides potential upside of ~18%,” says BP Equities research report.

Buy stocks of IPCA Labs; target Rs 468

IPCA Labs:-

"IPCA Labs’ recorded better than expected revenue growth - up 19.7% YoY to Rs 6.34bn. Growth was primarily driven by rebound in domestic formulation (up 18.6% YoY) and 58% growth in export API’s (ramp-up in recently added capacities as well contribution from Tonira Pharma)."

"On the other hand, export formulations grew mere 9% YoY, restricted due to (1) “Track & Trace” issue & delay in artwork approval in the EU & Russia, (2) lagged US sales due to capacity constraints and (3) delayed shipment in the Institutional segment. The company also received approval for artesunate+amodiaquine - revenue contribution expected by Q4FY13E. The market size for the product is ` 1.5- 2bn and no significant competition is envisaged for next two years."

"IPCA’s growth mantra revolves around creating a competitive position in formulations by leveraging on its API goldmine. We expect acceleration in export formulation revenues mainly led by the generics arm (US market in particular post FDA approval to its Indore site) and sustained growth in branded promotional markets. Healthy rebound in domestic formulation revenues hereon shall add to growth momentum."

"We have increased our FY13E/14E EPS estimates by 8.8%/6.0% to reflect increased revenue contribution from Export API business and higher margins aided by favourable sales mix & currency benefits."

"At CMP, the stock trades at 13x FY13E and 11.4x FY14E earnings. We recommend ‘Accumulate’ on the stock with a revised target price of Rs 468 (13x FY14E EPS)," says Dolat Capital research report.

Buy stocks of CEAT; target Rs 125

 CEAT:-

"CEAT reported good results for Q1FY13 which was driven by sharp improvement in operating margins on YoY basis boosted by declining natural rubber prices and increasing capacity utilization at the Halol plant. However, on QoQ basis the margins were a bit lower which was in line with expectations. We retain our positive view on CEAT and maintain Buy rating on the stock."

"CEAT reported good results for Q1FY13 which was driven by sharp improvement in operating margins on YoY basis boosted by declining natural rubber prices and increasing capacity utilization at the Halol plant. However, on QoQ basis the margins were a bit lower which was in line with expectations. We retain our positive view on CEAT and maintain Buy rating on the stock."

"Sri Lankan business reported net sales of Rs 92.9 cr up 17% YoY and down 4% QoQ. EBITDA margin stood at 14.9% vs 14.5% in Q4FY12 primarily due to benefit of rupee depreciation. Consolidated net sales increased 10% YoY to Rs 1,225 cr; Consolidated EBITDA margin stood at 9.3% with a PAT of Rs 29 cr in Q1FY13."

"We expect CEAT to report continuous improvement in its operating performance, led by improving utilization at the Halol plant and declining raw-material prices. Changing product mix, expanding presence and attractive valuations seem propelling for CEAT at current levels."

"At CMP, the stock is trading at P/E of 3.21x FY13E and 2.54x FY14E earnings with an EV/EBITDA of 3.16x and 3.09x which we believe are lower as compared to peers. We maintain BUY on the stock with a target price of Rs 125 (4x FY13E EPS of 31.2)," says Nirmal Bang research report.

Buy stocks of Allahabad Bank; target Rs 205

Allahabad Bank:-

"Allahabad Bank’s loan book grew at 11.9% YoY and remained flat on QoQ basis. Out of the total advances portfolio, Retail grew 15.5% YoY, agri grew 19.6% YoY and SME grew 11.7% YoY. Management expects to sustain loan growth of 20%+ going forward with major focus on retail book. We have factored in loan growth of 18.5% for FY13E and 18.4% for FY14E."

"NIM stood at 3.17% in Q1FY13, as compared to 3.23% in Q4FY12 and 3.4% in Q1FY12 resulting from higher cost of funds coupled with decline in CASA ratio. Management has reiterated its guidance of maintaining NIMs 3%+ for FY13E. We expect NIMs to be at 3.1% for both FY13E and FY14E."

"Non-interest income of the bank declined 12.8% QoQ and increased 8.3% YoY to Rs 309.5 cr. Fee based income increased 15.5% YoY to Rs 239 cr in Q1FY13 and the bank showed a trading profit of Rs 55 cr vs 26 cr in Q1FY12. Management expects improvement in non-interest income in the coming quarters driven by higher recoveries. We expect non-interest income to grow at 8.5% for FY13E and 12.0% for FY14E."

"Given the current challenging macro-economic scenario, the bank’s strategy is to focus more on improving the asset quality rather than focus on growth and margins. We believe that the bank will continue to focus on strengthening its balance sheet. Being an attractive mid size public bank with above average credit growth, stable NIMs and comparatively healthy return ratios (RoE of ~20% and RoA of 1%+) we believe that Allahabad bank looks attractive at current levels."

"At CMP, Allahabad Bank is trading at 0.65x and 0.55x of its FY13E & FY14E ABV whereas on PE it is trading at 3.26x and 2.66x in FY13E and FY14E respectively. We continue to maintain BUY on the stock with a target price of Rs 205," says Nirmal Bang research report.

Buy stocks of Adani Ports & SEZ; target Rs 145

Adani Ports & SEZ Ltd:-

"Adani Ports & SEZ Ltd handled consol volume of 22.5 MMT (Abbott 3.3 MMT) that led to consol revenue is Rs 1,028 crore and PAT is Rs 276 crore that is impacted by high interest costs of Rs 325 crore. Abbott port recurred losses of Rs 130 crore inQ1FY13 and reveals that income from Abbott port is not sufficient to pay interest obligation for overseas assets in Q1FY13."

"Adjusted Standalone Q1 PAT, Rs 290.6 crore (SEZ land sale to JV AICTPL, Rs 160 crore and forex loses of Rs 32.2 crore) is below to our expected PAT of Rs 308 crore. Standalone cargo volume 17.42 MMT (+15.4%, YoY) is in line to our expectation and realization of Rs 327/ Ton (-3.4%. YoY) led to port revenue of Rs 569 crore below our estimates. EBITDA grew to Rs 472 crore (+30%, YoY) and margins improve by 650 bps."

"We revise our estimates to Rs 6.3 and Rs 9.3 from Rs 7.0 & Rs 10.1 for FY13E and FY14E. We cut the full year cargo volume estimates to 79.1 MMT (-7%) from 85 MMT due to lower demand of imported coal from the coal sector. We retain “BuY” on APSEZ with TP of Rs 145 (from Rs 163) based on 1.) strong operating cashflow of ~Rs 2500 crore supported by 60% fixed revenue contracts 2.) ramp up of new capacities on Dahej, Hazira & Mormugao 3.) better EBITDA margins in the industry," says KRChoksey research report.

Buy stocks of Oriental Bank; target of Rs 320

Oriental Bank of Commerce:-

“Oriental Bank of Commerce (OBC) reported 10% YoY and 48% QoQ PAT growth (24% above estimates), led by (1) higher recoveries from written-off accounts (INR2b), boosting non-interest income, and (2) sequential decline in slippages and higher MTM provision reversals, leading to lower provisions.”

“Reported margins improved 11bp QoQ to 2.79%, as the yield on funds improved 6bp QoQ and cost of funds declined 4bp QoQ, led by sequential decline in bulk deposits (declined 3.5% QoQ to INR415b). Asset quality surprised positively, as contrary to peers, gross slippages declined from INR13.2b in 4QFY12 to INR7b. GNPAs declined 6% QoQ, driven by (1) healthy recoveries and upgradations at ~INR4.3b, and (2) higher write-offs at INR4.8b v/s INR5.4b in 4QFY12. OBC restructured loans aggregating INR20.4b, resulting in net cumulative book of INR109b (9.6% of loans). Loans grew 16% YoY and remained flat QoQ at INR1.14t. While deposits grew 9.4% YoY. Core deposit grew by 20% YoY and 3% QoQ. CASA ratio remained stable QoQ at ~24%. We expect OBC to report RoA of ~0.7% and RoE of ~12.4% over FY13/14. The stock trades at 0.6x FY13E BV and 0.5x FY14E BV. Maintain Buy,” says Motilal Oswal research report.

Hold stocks of Maruti Suzuki; target of Rs 1175

Maruti Suzuki India:-

“Maruti Suzuki India, Net sales stood at Rs 107.7 bn (+26% YoY, -8% QoQ), driven by volumes of 296k units (+5.1% YoY, -17.9% QoQ) and sharper than expected increase in realizations (+20% YoY, +11.9% QoQ). Export realizations showed a sharp increase (+19.9% YoY, +5.4% QoQ) aided by Rs 1 bn revenue from the Ertiga (FY13 mgmt target at Rs 4bn). EBIDTA stood at Rs 7.8 bn vs our est. of Rs 8 bn, 2% below estimates. EBIDTA margins stood at 7.3% vs our est. of 7.6%. RM Cost/Sales was lower by 180 bps QoQ on benefits of price hike and a richer product mix; however, 170 bps QoQ increase in other expenses largely offset the benefit. Adverse forex movement impacted royalty by 100 bps QoQ. Despite an in-line operational performance, net profit at Rs 4.2 bn was 10% below estimates owing to a lower other income (Rs 1.1bn vs Rs 1.8bn YoY).”

“Our TP on MSIL at 13xFY14E EPS of Rs 90 stands at Rs 1175. The stock is currently trading at 17.5x/12.3x FY13/FY14E earnings. In the near-term plant shutdown and currency remain key negative catalysts. We have upgraded the stock to HOLD largely owing to the recent underperformance but believe that the valuations still do not provide sufficient cushion,” says Emkay Global Financial Services research report. 

Hold stocks of Yes Bank; target of Rs 379

Yes Bank:-

“Yes Bank’s (YBL) post tax income grew by +34% YoY on the back +33% growth in NII and a surprising +74% growth in non interest income. CASA deposits at Rs. 81.7 bn grew by 72% (albeit on a lower base), the highest recorded growth in the past six quarters. NIMs capped at sub 2.8% past seven quarters continued to disappoint. Notwithstanding restructured advances remained virtually stable at 0.51%, deteriorating NPLs cautioned towards bleak economic environment taking toll on the banks asset quality.”

“YBL reported 16.4% YoY growth in credit but its customer assets (advances + credit substitutes) grew 32.4% YoY. Flipping higher yielding advances (~12%-13%) with lower yielding credit substitutes (~10.5%-11%) coupled with higher share of bulk deposits (52.3%) resulted in curbed margins of 2.8% (reported) for YBL. NIMs could have been lower had it not been for some short term funds borrowed by the bank at rates lower than that of retail term deposits.  We expect 2.9% NIM for FY13E, on the back of strengthening CASA ratio. The bank’s CASA ratio improved by 123 bps to 16.3% as against 15.0% in Q4FY12, backed strong growth in granular SA deposits which grew by Rs. 5.0 bn sequentially.”

“We expect 18.0% CASA ratio for FY13E on the back of the bank’s robust branch expansion spree. Non Interest Income grew by 74.3% y-o-y from Rs. 1,653 mn in Q1FY12 to Rs. 2,881 mn in Q1FY13. The Financial Markets segment (up 282% YoY, including Rs 0.3-0.4bn of trading gains) was a key driver. Growth in the other segments too was above balance sheet growth.  Cost to income ratio was at 39.5% in Q1FY13 as against 37.4% in Q1FY12, given the branch expansion plans of the bank but it still continues to be at sub 40% comfort zone.  We expect 41.3% efficiency ratio for FY13E. We rate Hold on the stock with a target of Rs. 379 with a PBV target multiple of 2.1x on FY14E BV of Rs 183,” says SKP Securities research report.

Sell stocks of Asian Paints at current level

Asian Paints:-

“Asian Paints’ Q1FY13 consolidated revenues at Rs 2,539.3 crore, grew by 12.3% yoy, largely led by price hikes and favorable product mix; however volumes declined by 2% yoy. The decline in volume can also be attributed to the effect of high base in both Q1FY12 and Q4FY12 due to dealer stocking ahead of price hikes in addition to slowdown in GDP. The management admitted that volume decline was much below their expectation. Both, the urban demand and rural demand grew at a similar pace. Despite the negative volume surprise, management remains confident of demand reviving as the retailer and dealer feedback regards future expectations remains optimistic However, we are circumspect about their optimism and maintain a cautious stance. On a standalone basis, the net sales grew by a mere 6.7% yoy in value terms to Rs 2,035 crore while the EBITDA grew by 12.2% yoy despite a 6% rise in material index on the back of favourable product mix. The gross margins expanded by 315 bps yoy. The company continues to see a favourable shift towards premium segment from the lower end supported by favourable consumer demographics.”

“EBITDA margins for the quarter stood at 17.5%, up 20 bps and 250 bps on yoy and qoq basis. Raw Material costs stood lower by 160 bps to 55.9%. However, increase in other expenses by 100 bps yoy and that of personnel expenses by 40 bps yoy lead to the growth in margins. The material prices have increased by 6.0% over the last year, however better contribution from higher margins products and price hikes have helped the company arrest the decline in margins. Despite increase in depreciation costs, lower other income, and forex losses, lower interest expenses help the company arrest the fall in net profit margins. The net profit margins for Q1FY13 stood at 11.7%, down 30 bps yoy. The net profit grew by 10.1% yoy to Rs 298.9 crore. The net profit adjusted for minority interest stood at Rs 288.4 crore.   The company has given guidance of Rs 750 crore capex for FY13E, which includes Rs 500 crore to be spent on the Khandala plant in Maharashtra.”

“Slowdown in GDP growth, high inflation scenario, weak monsoons and drying up of investment cycle coupled with political inaction on account of coalition politics can lead to the likely fall apart of the Indian consumption story in the near term. Asian Paints, a play in the consumption story and changing consumer preferences, in all respect is likely to be affected by this. Early signs of volume growth falling and dwindling rural growth might indicate weak growth in volume in the near term. Further, volatile crude prices, depreciating rupee and inability to pass on further price hikes would keep margins under pressure. At the CMP of Rs 3,564, Asian Paints trades at a PE multiple of 28.8x and 23.8x FY13 & FY14 consensus earnings estimates and at premium valuations. Considering, unfavorable macro environment and premium valuations, we recommend a SELL on the stock,” says Ventura research report

Sell stocks of Hindustan Unilever; target of Rs 435

Hindustan Unileve:-

“Hindustan Unilever (HUL) reported net sales growth of 14%YoY to Rs 6250 crores for Q1FY13. Domestic consumer business grew at 19%YoY led by underlying volume growth of 9%YoY. On segmental basis Soaps & Detergents registered 24%YoY growth, Personal products 13%, Beverages 8% and Packaged foods 17%. EBITDA margin for Q1FY13 rose 137bps YoY to 13.4% aided by gross margin improvement of 215bps, lower other expenses (down 93bps) partly offset by higher Advertising & Promotions spends (up 160bpsYoY). Net profit for the quarter grew 28%YoY to Rs 726 crores adjusted for income from sale of properties worth Rs 605 crores. We assign SELL rating on the stock with a price target of Rs 435 (25x FY14E EPS of Rs 17.4).”

“HUL continued with strong quarterly performance with topline growth of 14%YoY (up 10%QoQ) driven by 9%YoY underlying volume growth. Domestic consumer business grew by 19%YoY. Both key segments Soaps & Detergents and Personal products contributed with double digit volume growth. HUL reported double digit growth across segments with its key segments Soaps & Detergents (improved volumes & double digit growth across brands), Personal Products(driven by skin & Hair care) and Packaged foods (Kissan Ketchup and soups registering double digit growth led by volumes) leading the pack registering 24%, 13% and 17%YoY revenue growth. Beverages segment reported growth of 8% YoY growth led by strong growth in coffee. EBIT growth was driven by all the segments. EBIT margins for the soaps & detergent category (up 297bps YoY), Beverages (up 213bps YoY), Packaged foods (up 100bps YoY) and personal products (up 41bps YoY) improved on back of increase in prices, global buying efficiencies and lag effect between consuming cost and replacement cost. We believe with judicious price hikes the current EBIT margins are sustainable.”

“We maintain our positive outlook on the stock and believe 21% earnings growth over FY12-14E is achievable considering healthy volume growth & improved margins (product mix & price increases). However the stock is currently trading at a P/E of 31x and 27x its FY13E and FY14E earnings. Consequently, we recommend SELL on stock with a target price of Rs. 435, (25x FY14E EPS of Rs 17.4), giving a downside potential of 7%,” says KRChoksey research report.

Sell stocks of Wipro; target of Rs 321

Wipro:-

“Wipro’s 2QFY13 US dollar revenue guidance of 0.3-2.3% QoQ growth was poor and, in absolute terms, is the third successive quarter that the IT major has given the exact same dollar revenue guidance, implying no growth momentum whatsoever. In our view, this guidance is likely to lead to the stock continuing to get a short shrift from investors. Owing to a worsening growth outlook for the company and consistent decline in YoY IT services dollar revenue growth over the past five successive quarters, we have cut our PE multiple from 15x to 12.5x FY13E EPS. Thus, despite the fact that the stock has shed 16% since we downgraded it to Sell, we retain our Sell rating with a revised TP of Rs321 (Rs392) as we have cut the PE multiple and also FY13E/FY14E EPS estimates by 1.6%/3.9%, respectively.”

“Wipro’s 2QFY13 US dollar revenue guidance of 0.3-2.3% QoQ growth was poor and, in absolute terms, is the third successive quarter that the IT major has given the exact same dollar revenue guidance, implying no growth momentum whatsoever. In our view, this guidance is likely to lead to the stock continuing to get a short shrift from investors. Owing to a worsening growth outlook for the company and consistent decline in YoY IT services dollar revenue growth over the past five successive quarters, we have cut our PE multiple from 15x to 12.5x FY13E EPS. Thus, despite the fact that the stock has shed 16% since we downgraded it to Sell, we retain our Sell rating with a revised TP of Rs321 (Rs392) as we have cut the PE multiple and also FY13E/FY14E EPS estimates by 1.6%/3.9%, respectively. Wipro’s’ 1QFY13 IT service revenue declined 1.4% QoQ to US$1,514.8mn (our estimate US$1,544mn). Pricing fell 1.7% QoQ and volume growth stood at 0.8% QoQ, both below our estimates (0.7% QoQ fall, 1.3% QoQ growth, respectively). Adjusted for cross-currency movements, constant currency revenue grew 0.3% QoQ to US$1,540mn. From a vertical perspective, telecom equipment manufacturers and investment banking remain under stress. In rupee terms, IT revenue grew 9.5% QoQ to Rs83.1bn (our estimate Rs83.6bn). Total revenue grew 6.8% QoQ to Rs104.8bn, slightly below our and consensus estimates.”

“Wipro’s 2QFY13 guidance was a major disppointment and reflects no growth momentum whatsoever. We retain our Sell rating on Wipro with a revised TP of Rs321 (Rs392) as we have cut the target PE multiple to 12.5x (15x) and also FY13E/FY14E EPS by 1.6%/3.9%, respectively,” says Nirmal Bang research report.

Buy stocks of Dish TV; target of Rs 79

Dish TV:-

“Dish TV standalone performance was better than our expectations with subscription revenue growth of 4.6% QoQ. Lease rental revenue was lower due to change in accounting policy, which led to flat revenue QoQ. Lease rental revenue stood at Rs460mn v/s 660mn in Q4FY12. 50%/15% QoQ decline in advertisement/other operating expenditure supported EBITDA growth of 8% QoQ to Rs1.55bn. EBITDA margin at 29.9% grew 244bps QoQ. Total loss for the quarter stood at Rs323mn which includes forex loss of Rs138mn. Adj. net loss for the quarter was at Rs 164mn v/s Rs180mn in Q4FY12. On the back of strong EBITDA and lower capex (due to lower subscriber addition), the company reported +ve FCF of Rs400mn v/s Rs430mn in Q4FY12.”

“Dish TV added 0.50mn gross subs v/s our est. of 0.58mn. ARPU during the quarter grew 2.9% to Rs156. SAC during the quarter stood at Rs2145 v/s Rs2127 in Q4FY12. Monthly churn rate remained stable at 1.0%. We estimate gross subscriber addition of 2.3mn for FY13E with ARPU of Rs158 (Q4FY13E ARPU at Rs165). We expect churn rate to remain at current levels going forward.”

“We revise our revenue and EBITDA marginally by 1%-2% for FY13E & FY14E, as our numbers already reflect higher ARPU assumptions. EBITDA margin in coming quarters is expected to decline from current levels due to increase in content cost. Net loss expands led by finance cost and depreciation. Revised net loss for FY13E stands at Rs797mn and PAT for FY14E is expected at Rs401mn. At CMP of Rs71 stock trades at 13.6x/11x EV/EBITDA of FY13E/FY14E. We maintain ACCUMULATE rating on the stock with revised TP of Rs79,” says Emkay Global Financial Services research report.

Buy stocks of Karur Vysya Bank; target of Rs 512

Karur Vysya Ban:-

“In FY12, Karur Vysya Bank (KVB) reported healthy performance even in on-going turbulent times on the back of healthy margin of 2.9% and robust growth in fee income. Followings are key observations in KVB’s annual report.”

“The bank’s management indicated that the major thrust areas for FY13 would be improvement in CASA ratio, improvement in asset quality and recoveries of NPAs, further broadening of fee income and increasing footprints to have a better pan India coverage. In the past four years, the bank opened 25 branches on an average each year; whereas in FY12, it added highest number of branches (81new branches and up-gradation of a satellite branch into a full fledged branch), taking the total to 451 KVB’s CASA deposit share came down to 19.2% in FY12 from 23.3% in FY11 on account of moderation in low-cost deposit mobilization mainly due to lesser liquidity in the system and competition from new-generation banks.”

“KVB maintained its secured loan book proportion in the range of 89-93% since last four years. On an industry-wise credit book break-up, KVB’s loan book is mainly exposed to infrastructure, textile, iron & steel, food processing and chemical industries. The bank’s exposure to these industries has been coming down over time barring in iron & steel On maturity profile front, as on end-March’ 12, up to 53% of KVB’s deposits and 43% of advances would redeem/mature in a one-year time horizon, compared to 46% of deposits and 39% of advances as on end-FY11. In FY12, KVB reported 28bps YoY decline in margin to 2.87%, on higher allocation of assets towards secured loans (low yielding & non risky assets), decline in low cost deposits share and higher cost of deposits.”

“Overall, we maintain our positive stance on the stock and estimate that the bank would report RoAA and RoAE in the 1.2-1.3% and 18-20% ranges respectively in FY13-14. We reiterate Buy rating on the stock with a target price of ` 512. At current price, it quotes at 1.5x and 1.3x ABV FY13 and FY14 respectively; based on our target price, the stock would trade at 1.6x adjusted book value FY14,” says Dolat Capital research report.

Buy stocks of Dr Reddys Labs; target of Rs 1824

Dr. Reddy's Laboratories Ltd:-

“Established in 1984, Dr. Reddy's Laboratories Ltd. is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Dr Reddy's started its operation in the Active Pharmaceutical Ingredients (API) segment, with a single drug in 60 ton facility near Hyderabad. In 1986 it shipped its first consignment of Methyldopa drug to West Germany. During FY11, the company launched 135 new generic products, filed 107 new product registrations and filed 56 DMFs globally. April 11, 2001, the symbolic bell rang and Dr. Reddy's became the first pharmaceutical company in the Asia-Pacific, outside Japan, to be listed on NYSE. Dr. Reddy’s Lab is the fastest Indian Pharma Company to cross $1 billion in revenues.”

“The company’s net profit jumps to Rs.3359.50 million against Rs.2627.40 million in the corresponding quarter ending of previous year, an increase of 27.88%. Revenue for the quarter rose 28.42% to Rs.25406.10 million from Rs.19783.20 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.19.81 a share during the quarter, registering 27.80% increase over previous year period. Profit before interest, depreciation and tax is Rs.3917.40 millions as against Rs.19783.20 millions in the corresponding period of the previous year.”

“India's pharmaceutical sector is gaining its position as a global leader. The pharma market in India is expected to touch US$ 74 billion in sales by 2020 from the current US$ 11 billion, according to a PricewaterhouseCooper (PwC) report. At the current market price of Rs.1614.00, the stock P/E ratio is at 18.14 x FY13E and 17.09 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs 88.98 and Rs.94.46 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 13% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 15.02 x for FY13E and 14.20 x for FY14E. Price to Book Value of the stock is expected to be at 3.77 x and 3.09 x respectively for FY13E and FY14E. The first quarter witness a healthy increase in overall sales as well as profitability on account of Launching of new products and emerging markets, an enhanced store network and robust pharma businesses.”

“We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 1824 for medium to long term investment,” says Firstcall Research report.

Buy stocks of Hindustan Zinc; target of Rs 134

Hindustan Zinc:-

“Hindustan Zinc (HZL) net sales at Rs27.1bn(-12.3%QoQ,-3.9%YoY) missed estimate primarily due to lower than expected refined metal ouput. Mined metal for Zinc declined by 4.3%YoY/17%QoQ to 162,000 tonnes as it continued to mine lower grade Zn ore at Rampura Agucha (RAM). However mined metal for Lead increased by 30.3%YoY as the production increased by 60%YoY at Sindesar Khurd mine. Silver sales also increased by 76%YoY/-2.7%QoQ to 72000 kgs due to commissioning of 350tonnes silver refinery at Pantnagar.”

“HZL cost of production of Zinc (excluding royalty) was at Rs45,579 per tonne primarily due to increase in coal and other consumable cost. EBITDA declined by 10.8%YoY/13.9%QoQ to Rs13.93bn (DCe:Rs14.84bn) due to lower production and higher cost of production. Other income increased by 59.8%YoY/50.7%QoQ due to increase in treasury yields and investment surplus and one time mark to market gain of Rs1.2bn due to fall in interest yields. HZL tax rate has decreased to 12.9% (DCe:20%) primarily due to higher other income which was tax free. HZL profits rose by 12%YoY/5.8%QoQ to Rs15.8bn boosted by higher other income and lower tax rate despite lower operating profits. HZL maintained its production and sales guidance for the year and stated that the decline in grade at Agucha mines were as per its expectation. HZL expects to start the mining at 3 of its mines at Zawar in Q3FY13 which will add 30000 tonne MIC Lead production.”

“HZL will continue to deliver strong free cash flows, despite higher spending on the mine development at Kayar and Rampura Agucha. HZL earnings growth will be driven by increase in silver and Lead volumes which will lead to earnings CAGR of 12% over FY12-14. HZL is currently trading at 4.4xFY13EV/EBITDA and 3.3xFY14EV/EBITDA. We maintain our Accumulate rating with a target price of Rs134 (5.5x FY13 EV/EBITDA),” says Dolat Capital research report. 

Hold stocks of South Indian Bank

South Indian Bank:-

"For 1QFY2013, South Indian Bank (SIB) reported healthy net profit growth of 49.2% yoy (up 0.9% qoq) to `123cr, which was higher than our estimates on account of higher non-interest income than estimated by us. We remain Neutral on the stock."

"For 1QFY2013, the bank’s business growth remained healthy, with advances growing by 23.5% yoy and deposits growing by 17.5% yoy. On a qoq basis, the growth in savings deposits was healthy at 8.0% qoq driven by 13.1% qoq growth in NRE Savings accounts deposits. The total low cost deposits (including low cost NRE deposits) stands at ~22% of overall deposits. The gold loan portfolio declined on a sequential basis by ~`400cr and now stands at ~`6,400cr (23.4% of the overall portfolio)."

"The fee income of the bank reported a strong growth of 49.8% yoy during 1QFY2013. The treasury income was also strong, registering a growth of 34.0% yoy to `20cr. The asset quality of the bank surprised negatively in 1QFY2013, with slippages increasing to `91cr (annualised slippage ratio of 1.3%). The rise in slippages during 1QFY2013 can be primarily attributed to one chunky account (exposure of `38cr to a single MFI account)."

Outlook and Valuation

"The bank’s asset quality which had held up pretty well till now inspite of the macro headwinds (which have led to higher provisioning expenses for most banks) has started to witness signs of pressure. Aggressive yields (~12.8%) on non-gold loan portfolio could further increase provisioning expenses and hence provide downside risk to the bank’s ROA. Also, current valuations at 1.0x FY2014E ABV seems to have factored in the positives (strong growth in gold loans and traction in fee based income) and in our view are considerably above the valuations of small and mid-sized PSU banks having similar fundamentals. Hence we maintain our Neutral stance on the stock," says Angel Broking research report.

Sell stocks of Kotak Mahindra Bank; target of Rs 545

Kotak Mahindra Bank:-

"Kotak Mahindra Bank reported muted consolidated earnings of Rs 443 crore which grew 6.6% Y-o-Y & down 14.9% Q-o-Q, below than our expectation. Standalone bank, Kotak prime and Kotak Life continued to be key growth drivers to consolidated PAT. Securities broking, investment banking and asset management businesses continued to see weak earnings and core operating performance. Net earnings from Broking, and investment banking management were down 54% & 40% sequentially reflecting challenging operating environment and falling business volumes. Kotak Life insurance‘s net profits went down 30.4% Y-o-Y to Rs32 crs owing to subdued volume growth."

"On standalone basis, NII increased 27.0% y-o-y & 4.9% q-o-q led by strong loan growth of 30.9% y-o-y & 8.3% Q-o-Q and steady NIM. Standalone PAT grew modestly 12.1% y-o-y and down 4.9% q-o-q mainly due to weaker non interest income and higher loan loss provisions. Asset quality has slipped during the quarter as gross NPAs and net NPAs increased sharply 11.5% Q-o-Q & 43.3% Q-o-Q respectively. Provision coverage ratio (excluding write offs) declined from 61.3% in Q4FY12 to 50.3%. Maintain Reduce."

"Financing businesses’ contribution to consolidated earnings increased 76% in Q4FY12 to 85% in Q1FY13 owing to lower-than-expected earnings capital market linked businesses and weak earnings from Kotak life insurance. Standalone Bank’s NII grew by 27.0% y-o-y and 4.9% on q-o-q to Rs 721 crore led by strong loan growth and steady NIMs. Non-interest income increased only 5.5% Y-o-Y but down 5.1% Q-o-Q mainly due to sluggish fee income growth and lower distressed asset sale (Rs20 crore vs. Rs65 crore in Q1FY12). Net profits reported Rs282 crore growing 12.1% y-o-y & down 4.9% q-o-q. Kotak prime (KP) reported PAT of Rs94 crore vs. Rs97 crore in Q4FY12, down 3.1% Q-o-Q. We expect the bank to deliver 26.5% CAGR in net earnings over FY12-FY14 driven by strong loan growth, steady NIMs and stable asset quality and improving productivity levels."

Buy stocks of Hero MotoCorp; target Rs 2340

Hero MotoCorp:-

"Hero MotoCorp's 1QFY13 operating performance is in-line, with adj EBITDA margin at 10.8% (v/s est 10.7%) and adj PAT of INR6.15b (v/s est INR6.13b). While lower than estimated volumes and realizations resulted in marginally below estimated EBITDA, impact of which was offset by higher other income."

"Volumes grew 7.4% YoY (+4.5% QoQ) to 1.64m units (v/s est 1.67m). Realization were flat QoQ (+ 2.6% YoY) to INR37,799 (v/s est INR38,284) impacted by adverse market mix, despite price increases in April & May and higher excise benefit at Haridwar plant (due to excise increase). As a result, net sales grew by 10% YoY (+4% QoQ) to INR62.1b (v/s est INR63.9b). Adj EBITDA margin at 10.8% were flat QoQ/YoY as benefit of operating leverage as offset by part impact of weaker INR on RM and royalty. EBITDA grew 14.5% YoY (+5% QoQ) to INR9b (v/s est INR9.2b)."

"Higher other income and lower tax boosted reported PAT to INR6.15b (v/s est INR6.13b). The management has maintained its industry growth guidance at 9-10%. Its inventory levels have now increased to ~4 weeks (v/s 3 weeks earlier). It expects short-run margins to remain under-pressure due to weaker INR (70-80bp impact in 2QFY13) and increase in advertising spend (v/s lower spend in 1QFY13). We maintain our EPS estimates for FY13/FY14 at INR132/INR146. We model in for volume growth of 9%/12.5% for FY13/FY14, and EBITDA margins of 14.4%/14.7% respectively."

"We maintain our EPS estimates for FY13/FY14 at INR132/INR146. We model in for volume growth of 9%/12.5% for FY13/FY14, and EBITDA margins of 14.4%/14.7% respectively. Hero MotoCorp has outperformed Sensex (by 10% in last 6 months and 24% in last 12 months) on the back of strong volume growth. However, volume momentum in domestic 2W industry is expected to moderate in 1HFY13 to ~6%, but expected to pick up in 2HFY13. Also, there are no near term catalysts, as margins remain under pressure and profit growth below-normal. However, long term potential remains intact, with significant volume growth and margin expansion potential ahead. The stock trades at 15.8x FY13 and 14.3x FY14 EPS. Maintain Buy with target price of INR2,340 (16x FY14E EPS)," says Motilal Oswal research report.

Buy stocks of Dish TV; target Rs 82

Dish TV :-

“Dish TV’s Q1FY13 result was in line with our expectation. The company reported net sales of Rs 520crs, a growth of 12% YoY driven by higher subscriber base and increase in ARPU. EBITDA stood at Rs 156crs, a robust growth of 27% YoY on account of higher revenue base and curtailed selling and distribution expenses. EBITDA margins jumped by 350bps over Q1FY12 to 29.9%. At net level, the company reported loss of Rs 32crs against loss of Rs 18crs over same period last year mainly because of increase in interest outgo and higher depreciation. Although digitization didn’t have any marginal impact on new subscriber addition in Q1FY13, the management is confident that new subscriber addition would happen in H2FY13E. With recent base pack hike, we expect increase in ARPU to continue. Strong revenue growth led by higher subscriber base, increase in ARPU and curtailed operating cost leave further room for margin improvement. With healthy free cash flow, we expect leverage ratios to improve in next 2 years.”

“The company reported 12% YoY net sales growth driven by 0.5mn new subscriber addition and 2% increase in ARPU. Gross subscriber base at the of the quarter stands at 13.6mn while net subscribers are 9.6mn. The management has guided new subscriber addition to continue and take a faster pace once digitization process progresses further. We believe the company will maintain in its numero Uno position in DTH market and will benefit the most from digitization. On ARPU front, 2%-3% ARPU growth can be seen for FY13E mainly on account of recent price hike taken in base price and incremental contribution from HD services.”

“Dish TV reported EBITDA margin improvement of 350bps YoY to 29.9% mainly on account of sustained SAC and lower ad spend in the quarter. With strong revenue growth, we expect further room for margin improvement for FY13E & FY14E; however increase in content cost due to renewal in programming contracts would be overhang in near term. Dish TV reported another strong quarter both on sales and EBITDA margins front. With ongoing digitization, we expect boost in new subscriber addition as the company is market leader and commands premium over its peers. Healthy growth in ARPU coupled with higher subscriber base support strong revenue growth. At current price, the stock is trading at 8.8x EV/EBITDA to its FY14E earnings. We recommend BUY with a target price of Rs 82,” says KRChoksey research report.

Buy stocks of Bajaj Auto; target Rs 1,933

Bajaj Auto:-

"Bajaj Auto 1QFY13 results are below estimates, with EBITDA margins at 17.9% (v/s est 18.7%) and adj PAT at INR7.2 (v/s est INR7.27b), impacted by adverse product/market mix and lack of operating leverage. Volumes de-grew by 1% YoY (+6% QoQ) to 1.08m units (v/s est 1.1m). Realizations up 4.7% YoY (-1.4% QoQ) to INR45,095/unit (v/s est INR45,440). Net revenues grew by 3% YoY (5% QoQ) to INR48.6b (v/s est INR49.8b). EBITDA margin declined by 190bp QoQ (+10bp YoY) to 17.9% (v/s est 18.7%), impacted by adverse product (lower 3W volumes) and market mix (lower exports), higher staff cost (+70bp QoQ) despite 6% QoQ higher volume growth and higher other expenses (no benefit of operating leverage). Higher other income at INR1.8b (v/s est INR1.3b) boosted adj PAT to INR7.2b (v/s est INR7.27b) - 1% YoY growth (-5% QoQ)."

"We cut FY13EPS estimates by 1% each to model higher cost push, impact of which is diluted by price increase in domestic market from Jul-12 of ~1% (over & above ~1.25% increase in April). However, we upgrade FY14 EPS by ~5% to INR138, as we change our USD/INR to 52 (v/s 50 earlier). We model volume growth of ~8%/13% for FY13/FY14 and EBITDA margins of 18.6%/18.9% respectively. We model USD/INR rate of 50 each for FY13 and 52 for FY14 (v/s 49.5 for 1QFY13 v/s 48.2 for FY12). Our estimates could see further upgrade as it hedges its FY14 receivables at favorable rate of over 55. If it hedges FY14 Fx exposure at 55, our EPS would see upgrade of ~5% to ~INR145. The stock is valued at 13.9x FY13E EPS of INR109.7 and 11x FY14E EPS of INR138.1, and ~3.3% dividend yield on FY13 basis. Maintain Buy with target price of INR1,933 (14x FY14E EPS)," says Motilal Oswal research eport.

Hold stocks of Axis Bank; target Rs 1205

Axis Bank:-

 "Axis Bank Ltd. has reported decent numbers, which were inline with our expectations, with healthy core performance but slight deterioration in asset quality during Q1FY13. PAT was aided on decent NII and lower operating expenses during the quarter. During Q1FY13, NII grew by a decent 26% YoY to Rs.21,799 mn, on the back of strong Advances growth. Its Advances grew 30% YoY (Ex-currency depreciation 25%), mainly from robust growth of 50% YoY in retail segment (as per outlined strategy). Its Deposits grew by 21% YoY, while CASA grew by 17% YoY. However, its CASA share in total deposit contracted by 148 bps YoY & 248 bps QoQ standing at 39.1%, mainly due to contraction in current deposit and high growth in term deposits. The share of bulk deposits stood at 37% of total deposits against 39% in Q1FY12."

"The Bank reported a sluggish non interest income growth of 9% YoY, supported by fee from retail and agri & SME banking. Treasury income saw a growth of 114% YoY, which includes stake sale from Max India (Rs.890 mn). The Bank expects non interest income growth to track B/S growth. Axis Bank’s operating expenses increased by 16% YoY with employee expenses increasing by 14% YoY and other operating expenses increased by 18% YoY on higher network expansion. Its Cost to Income ratio improved to 44.1% in Q1FY13 as against 46.1% in Q1FY12. Axis Bank’s total provisions in Q1FY13 increased by 47% YoY to Rs.2,588 mn on account of higher provisioning required on loan losses & standard assets (Rs.2.75 bn against Rs.1.37 bn in Q1FY12) from higher slippages. Write back on investment depreciation aided provisions. As a result, the Bank’s Net Profit saw a growth of 22% YoY and stood at Rs.11,535 mn."

"Axis Bank has grown at a very healthy pace in past few years with strong build-up in liability franchise, diversified loan book, stable asset quality and high return ratios. We have largely retained our estimates and going forward, we expect its Advance & Deposit to grow by 19.1% & 17.7% respectively in FY13E and 19.5% & 18.4% respectively in FY14E, while Net Profit to grow at 7% in FY13E & at 16% in FY14E. The steady performance, higher than system growth outlook, focus on retail assets and better deposit franchise will emerge as key value drivers for the stock in medium term. Axis Bank currently trades at an attractive valuation of 1.4x FY14E ABV & 8.2x FY14E Earnings. We change our rating to “Hold” with a price target of Rs.1205," says Sushil Finance research report.

Buy stocks of Sterlite Industries at current level

Sterlite Industries:-

"Sterlite Industries chart looks good. Firstly it has gone through a deep correction and that correction stopped almost exactly at Rs 105, which is a significant support level. That is the point at which we thought the stock should find some support and stem its decline. That happened because nifty was better yesterday. At this point Sterlite is a buy, the stops are very tight. If yesterday’s lows are broken then clearly the trend has not changed. So with a very small risk it’s possible to get a reward, again towards Rs 120-125. It is a very good trade."
He further added, "We have been downbeat on Hexaware Technologies for a long time now. I had suggested that the trend there is giving a distribution pattern and Hexaware has fallen and yesterday it cracked its final support. So even if it rallies a bit today that would be a selling opportunity. I think the stock is going much lower, probably it will go below Rs 90. It is a disappointment but it had a very good rally and it is coming back again that is the way market is."

Buy stocks of Exide Industries at current level

Exide Industries:-

 "I would buy Exide Industries because we have seen improvement in market share and growth coming back over last couple of quarters. Two things for Exide going forward over the next 3 quarter perspective, this is a period which coincides with the strong recovery in auto sales which you saw three years back post the financial crisis. So, the replacement cycle looks very well positioned for them and they make most of the money in replacement market anyway. So, that should board well in terms of growth rate and margins."
He further added, "Second a slightly more medium term perspective is a huge opportunity - two wheeler batteries, they are the dominant player in two wheeler batteries, but two wheeler has seen a massive shift from kick start to push start which mean battery becomes much more critical and after market demand for that has still not come through. That should start coming through from the December quarter. Two wheeler market is much bigger than car market. So, that is a big medium term driver for them."

Buy stocks of Tata Power at current level

Tata Power:-

 “Tata Power is a stock that is now entering in uptrend and therefore it is a share that we want to buy every time we can. At current prices assuming that this market is bottoming out in the short-term, Tata Power becomes a buying opportunity.”
He further added, “The same cannot be said for the other power stocks either it is Adani or even Reliance Power , it is best to avoid them, it is too early. The rally is about one hour old; I don’t think we need to rush into it.”

Tata Power`s trailing 12-month (TTM) EPS was at Rs 5.36 per share. (Mar, 2012). The stock's price-to-earnings (P/E) ratio was 18.36. The latest book value of the company is Rs 52.29 per share. At current value, the price-to-book value of the company was 1.88. The dividend yield of the company was 1.27%.

Buy Stocks of MindTree; target of Rs 708

Buy MindTree:-

 “MindTree reported in-line operational performance for 1QFY2013, with PAT coming in ahead of our expectation because of higher than expected forex gain. MindTree has been one of the good performers on the revenue ass well as margin front in the Indian IT mid-cap space, posting a 3.6% CQGR in its revenue over the past eight quarters. Management sounded confident of meeting Nasscom’s average revenue growth guidance for FY2013. We maintain Accumulate rating on the stock.”

“For 1QFY2013, MindTree reported USD revenue of US$105.5mn, on the back of 0.2% and 0.4% qoq volume and pricing growth, respectively. EBITDA margin improved by 211bp qoq to 20.9%, aided by 230bp qoq gain form INR depreciation and 80bp qoq benefit derived from operational efficiency. EBITDA margin was negatively impacted by 100bp qoq due to wage hikes given to 80% of the employee base from June 1, 2012.”

“Management is confident that its IT services business would continue its momentum and has given offers to 3,000 campus graduates for FY2013. Overall, the management indicated that the company will achieve Nasscom’s current industry growth guidance of 11-14% yoy in FY2013. To achieve this, the company requires minimum ask rate of 3.8% from 2QFY2013- 4QFY2013, which looks a bit stretched. Keeping that in notice, we expect USD revenue to grow by 9.5% yoy in FY2013. Overall, we expect the company to record a 9.8% and 14.8% CAGR in USD and INR revenue, respectively, over FY2012-14E. We expect the company’s EBITDA margin to increase from 15.3% in FY2012 to 18.6% in FY2013. Further, we expect the company to record a 22.4% CAGR in its EBITDA over FY2012-14E. We value the stock at 10x FY2014E EPS, i.e., with a target price of Rs708, and maintain Accumulate rating on the stock,” says Angel Broking research report.

Buy stocks of Cox & Kings around Rs 120-135

"Cox & Kings has to be under tremendous pressure in the short-term. But eventually it is a very attractive buy around Rs 120-135 range because of a couple of reasons. The price, right now, is reflecting the worst in that global scenario. Thus, we feel there is hardly 10% downside on the stock."

He further added, "Take a call on our quant model that we have been suggesting for various stocks like Sintex, United Breweries etc. In the last five years, they have gone for inorganic growth. They have acquired assets of high quality. That is what is attracting me at the current market price. Holiday Breaks PLC, the company's recent acquisition last year is very attractive for the future growth. It is a proper vertically integrated play on the tourism sector."

"Now, if you look from valuation perspective, Thomas Cook recently got acquired at Rs 14.8 annualised equivalent value. From FY13-end perspective, we finished trading somewhere around at AV of almost 20%. That means 30% minimum upside from next 18 months perspective. But we feel that the stock should go and stabilise. Right now, it is bit vibrating between this level of Rs 130 and 140. It will stabilise around at Rs 170-175 levels. So, someone who is taking a call from next six-twelve months perspective, I think he should be looking atleast 25% jump from hereon."

"If I take a valuation call, we are roughly working out with the number of close to Rs 188-202, depending upon how global scenario comes up in next twelve-eighteen months. So, this stock is very safe and the worst is already factored in into the stock price. Thus, if someone is taking a bet, he has hardly anything to lose on downside and he can use the fresh strategy to accumulate the stock. On upside, even if he gets Rs 170-175, he will make a handsome return of 25-30% in a very short span of time."

Buy stocks of South Indian Bank

"South Indian Bank, DCB and many banks which are available in this particular range of Rs 20-60, we have gone and studied how big banks have become very big and how that Rs 70-80 stocks became Rs 250-300 and we try to took a snapshot of those patterns and we felt two things that could benefit and how their model shaped out."

He further added, "They had been slowly growing in terms of branches and secondly, they have been investing on loan books, which was relatively safe and South Indian Bank is a conservative bank with almost 650 branches approximately 637 to be precise and targeting 700 branches by the year end. We feel this is one stock, which is relatively undervalued given the marketcap is Rs 2,800 crore."

"We had gone and studied how banks were acquired, which were in too distressed at much higher valuation than South Indian Bank and the roughly valuation that now we are pegging at is Rs 6.5 crore to Rs 7 crore branch for banks like South Indian Bank on conservative side because it has got good asset quality and there was last quarter where we expected a slippage of one big number, which has now been reversed which the management has guided in last quarter itself. So if you see we are expecting close to Rs 125 crore for this particular quarter and over Rs 550 crore for the full year."

"This is one story, which should be in a bet for three-four years. We have seen Karur Vysya Bank, ING Vysya Bank even PSU banks like UCO Bank, Vijaya Bank from Rs 38, Allahabad Bank, they all shaped out with development into their story and once they reach that more than 750 branches, their valuation got refined and South Indian Bank is the perfect proxy in this particular scenario where we feel given there is a strong support at Rs 22-23, which is because right now the stock is at Rs 25 because of the good expectation from numbers but is a very good buy at this Rs 22-23-25 levels from three-four years perspective."

"If the bank crosses Rs 1,200 by FY15-FY16 because as far basel III norms are concerned, they require roughly around Rs 1,400 crore. So if I adjust that also, shareholders who are buying right now, they would get atleast 20-23% year-on-year (YoY) growth from next three-four years perspective and asset which gives you more than 20% growth from next three-four years perspective, I think it is a blind bet and you have hardly anything to lose on valuation front on these kind of banks. So a win-win situation for long-term players and that is why we have put this in a portfolio bet."

Buy stocks of CMC; target Rs 1050

“CMC reported Q1FY13 results touch ahead of our/consensus expectation at top-line. However, the strong performance at the bottom-line was led by a margin surprise, higher other income and lower tax rate. The strong growth in SI is also aided by the currency; moreover, the weakness in ITES remains a matter of concern. The margin profile continues to be volatile due to continued investment in the business. We reiterate our ‘Accumulate’ rating, with a revised target price of Rs1,050 (from Rs1,140) as we cut our multiple due to growing uncertainty around demand.”

“CMC reported revenue growth of 10.3% QoQ to Rs4.5bn (PLe: Rs4.5bn, Cons: Rs4.2bn). However, excluding SEZ, top-line grew by 9.1% QoQ to Rs4.4bn. EBITDA margins expanded by 198bps QoQ to 16.6% (PLe: 15.6%, Cons: 14.3%), due to currency depreciation & cost optimization. PAT grew 36% QoQ to Rs584m (PLe: Rs463m, Cons: Rs428m), due to other income of Rs57.1m (PLe: Rs25.4m) and tax-rate of 22.6% (PLe: 29%). We expect the revenue momentum to stay in the mid-twenties, with stable margin profile. We reiterate ‘Accumulate’, with a target price of Rs1,050, 14x FY13E earnings estimates,” says Prabhudas Lilladher research report.

Buy stocks of TCS; target Rs 1290

“Tata Consultancy Services (TCS) reported Q1FY13 results touch-ahead of PLe/ consensus expectations. The management indicated no worrying signs in clients’ spending behaviour. Moreover, they indicated that some of the delays that they had witnessed at the beginning of the last quarter are allaying away. We see uncertain demand environment and weak pricing environment to restrict consensus estimate upgrade.”

“According to the management, the deal pipeline is more broad-based and the growth has come across the vertical. The strong growth in BFSI and telecom is led by one client ramp-up in each vertical. We see the growth getting scarce as the demand environment gets challenging. However, already pocketed deals for TCS gives better visibility of revenue compared to peers. The management is confident of achieving higher end of NASSCOM guidance in the constant currency terms.”

“The current price factors in strong performance by TCS. We tweak our model; hence revise our target price to Rs1,290 (from Rs1,270), 17x FY14E earnings estimate. We value TCS on FY14 due to better revenue visibility compared to Infosys, which we value on FY13 estimates. We retain our 'Accumulate' rating, with a revise target price of Rs 1,290,” says Prabhudas Lilladher research report.

Buy stocks of Infosys; target Rs 2530

“Infosys (For 1QFY2013) reported yet another disappointing quarterly result, broadly underperforming on all fronts. The most disappointing thing in Infosys result was revision of FY2013 USD revenue growth guidance downwards to at least 5% from 8-10% earlier, tad lower than our estimate of 6-8%. In addition, the company has stopped issuing quarterly guidance citing uncertainly in demand environment which is discomforting. The stock has got corrected significantly.”

“For 1QFY2013, Infosys reported revenue of US$1,752mn, down 1.1% qoq, impacted due to 3.7% qoq decline in pricing and a hit of US$15mn as a one-time reversal in a transformation project from a European utilities client. EBITDA margin declined by 181bp qoq to 30.8%, despite having benefits from ~8% qoq INR depreciation against USD because operating margins were impacted adversely by pricing decline (co attributing the decline to change in business mix with some sporadic pricing resets in FSI) and US$15mn of revenue reversal on account of a project cancellation.”

“Management has given a disappointing FY2013 guidance of atleast 5% yoy growth from 8-10% earlier, tad lower than our estimate of 6-8%. Post 1.1% qoq decline in USD revenue in 1QFY2012, the company requires ~3% ask rate in 2Q-4QFY2013 to achieve 5% growth in FY2013, which, at current scenario of company’s performance, looks a bit stretched. Hence, we expect USD and INR revenue to post a CAGR of 7.1% and 11.2%, respectively over FY2012-14E. On the EBIT margin front, for FY2013, the management expects it to go down by 50-100bp yoy in FY2013 which does not factor in the wage hike. Over FY201214E, we expect a CAGR of 11.4% and 9.5% in EBIT and PAT, respectively. At the CMP of Rs 2,265, the stock is trading at 14.0x FY2013E and 13.0x FY2014E EPS. We maintain Accumulate rating on the stock with a target price of Rs 2,530 but in the near term though we do not expect Infosys to give considerable absolute upsides,” says Angel Broking research report.