Hold stocks of TCS; target Rs 1270

"TCS in Q4FY12 reported a healthy all round growth in both topline and bottomline in an environment where future growth prospect of Indian IT was in question due to muted performance and guidance given by Infosys. The company’s USD term revenue grew by 2.41% sequentially to $2647mn against our expectation of $2612mn. Volume growth was 3.26% sequentially and average realization was down by 85bps mainly due to cross currency and change in business mix. For the full year of FY12, TCS’s USD term revenue crossed $10bn mark and registered a growth of whopping 24.24% backed by 23.00% of volume growth and 1.24% of realization improvement.”

“Operating margin dipped by 156bps sequentially mainly due to lower utilization and INR appreciation against USD. The company paid 100% variable bonus to the performer employees and that also put some pressure on margins. Higher hedging position saved aid TCS to book forex gain in a INR appreciating environment and hence net margin improved by 26bps sequentially. BFSI Weak; But Management Articulated Confidence About Future Performance.”

“BFSI vertical, in a very tough times, was little muted in the previous quarter but reported much better performance as compared to peers (Infosys: BFSI- -4.72%, HCL: BFSI- -2.72%). This shows TCS’s strong execution capability to penetrate and mine the customers in this space through services, like, ADM and BPO. Moreover, unlike competitors TCS management articulated very strong confidence about the segments performance in the near to medium term mainly backed by higher regulatory related spending and vendor consolidation. TCS also won 3 large deals in the BFSI space in the forth quarter. Among the other verticals, growth is equally distributed between retail, manufacturing, hi-tech and travel & transport. Telecom, after two consecutive quarters of negative growth, surprisingly registered 2.41% sequential improvement in Q4FY12.”

“TCS won 6 large deals in Q4FY12 and among that 3 is in BFSI space, 2 in retail and 1 in telecom. Although, deal wins are little muted compared to the previous few quarters mainly due to seasonality, we believe, TCS has very strong order book position and that give enough visibility and assurance about the near to medium term growth prospect. TCS hired more than 19000 employees in the forth quarter and for full year of FY12, the company’s gross employee addition was 70400 people on the top of 69700 added in FY11. Although, utilization was under pressure (80.64% in Q4 against 82.08% in Q3) due to huge denominator increase during the quarter. The company offered 6-8% salary hike to the offshore employees and 2-4% hike to onsite employees also paid 100% of variable performance bonus to the performers (against 70% by Infosys). We believe, this comparatively better wage hike and higher bonus pay would help to control attrition further which is already low compared to peers.”

“TCS is expected to maintain its industry leading growth in near to medium term backed by its strong order pipeline and recent big deal wins. We believe USD term revenue would grow by 16% to $11723mn in FY13 driven by 14% of volume growth and 2% improvement in average realization. The company’s continuous thirst to invest in S&M would put some pressure on margins but scale, broadening employee pyramid and higher utilization would help to absorb that pressure. Overall operating margin is expected to remain stable in FY13. At the current market price of Rs 1177, the stock is trading at 18x of FY13E EPS of Rs 63.36. We upgrade our recommendation from Neutral To Hold with a target price of Rs 1270 after discounting FY13 EPS by 20x,” says Way2Wealth research report.

Sell stocks of SBI May future; target Rs 1,995

"SBI on the daily chart has been consolidating with lower tops and lower bottom and stock has broken down below the neckline of head and shoulder pattern which was placed at Rs 2,100 levels. Hence forth the same support is likely to turn into resistance. The downward implication of inverted head and shoulder projects medium term target of Rs 1,900 levels. The 200 DMA for the stock is placed at Rs 2,015 which should be tested sooner. We recommend going short on SBI May Futures below Rs 2,075 with stop loss of Rs 2,115 for target of Rs 1,995. (Duration 9 days)," says IIFL research report.

Buy stocks of Reliance Infra; target of Rs 548

“Reliance Infra on the daily chart has signaled breakout from falling trend line above Rs 520 after declining for almost last one month. This breakout was also confirmed with positive crossover in RSI which indicates a buy from over sold position. Moreover on Monday, the stock bounced back from its 100-DMA which is bullish trend reversal pattern and followed with positive closing. We recommend buying Reliance Infra above Rs 528 with stop loss of Rs 518 for target of Rs 548,” says IIFL research report.

Buy stocks of JSW Steel; target of Rs 725

“JSW Steel on the daily chart has broken out from a bullish triangle with breakout placed at Rs 688. A higher opening above Rs 695 would confirm long term trend reversal from a declining trend. The stock has taken support at its 100 and 200-DMA which supports buying argument in the counter. The daily RSI exhibited the uptrend along with the increase in the price on Monday. A sustained move past the Rs695 levels will see the stock heading towards the levels of Rs720 in the medium term. We recommend buying JSW Steel above Rs 695 with stop loss of Rs 680 for target of Rs725. ( Duration 5 days),” says IIFL research report.

Buy stocks of Maruti Suzuki & Bajaj Auto

Jain told CNBC-TV18, “Maruti Suzuki is on our buy list considering that the volume traction has been decent and the recent launch of Ertiga and the success of the new Dzire and the new Swift models have been very good and again this traction in volumes will continue further the margins are also expected to improve. The story is very similar to Hero Motocorp, both have a very high contribution from rural areas.”

He further added, “Both these are in our buy list and with respect to Bajaj Auto I think we’ll have a market performer rating considering that it’s not fairing well in the domestic markets and further there are some pressures in the international markets where it has been operating like Sri Lanka has seen an exceptional increase in customs duties and so in that terms I think Bajaj Auto will be a market performer for us.”

Sell stocks of Axis Bank, PFC & Reliance

Jain told CNBC-TV18, “Maruti Suzuki is on our buy list considering that the volume traction has been decent and the recent launch of Ertiga and the success of the new Dzire and the new Swift models have been very good and again this traction in volumes will continue further the margins are also expected to improve. The story is very similar to Hero Motocorp, both have a very high contribution from rural areas.”

He further added, “Both these are in our buy list and with respect to Bajaj Auto I think we’ll have a market performer rating considering that it’s not fairing well in the domestic markets and further there are some pressures in the international markets where it has been operating like Sri Lanka has seen an exceptional increase in customs duties and so in that terms I think Bajaj Auto will be a market performer for us.”

Hold Polaris Financial Tech; target Rs 158

“Polaris Financial Technology, for Q4FY12 in Dollar terms, Revenues fell 8% QoQ to $103.5mn on the back of sharp decline in product revenues which fell 25% QoQ to $ 23mn (Q3FY12 product revenues had a 1 time license revenues of $7mn). Intellect wins during the quarter fell 46% YoY to 11. Services revenues fell 1.3% due to delayed client decisions. INR Q4FY12 EBIDTA margins fell sharply by 592 bps QoQ to 12.5% due to lower product revenues and rupee appreciation during the quarter. Q3FY12 had seen a significant rise in margins to 18.4% due to rupee depreciation. INR Net Profits for the quarter were flat at Rs 61.4 crs aided by a onetime other income of Rs 15 crs from sale of property and fall in tax rate by 1021 bps QoQ.”

“For FY12, $ revenues grew 23% to $428mn with services growing 19% and products growing 37%. INR EBIDTA margins grew 68 bps to 14.2%. PAT grew 9% to Rs.220.7 crores despite higher tax rate of 22% against 15% in FY11. The management has guided 17%-20% growth in FY13 revenues which would be in the range of Rs 2400 �" Rs 2460 crs. The order book pipeline for intellect is very robust at ~ $400mn and that for services is ~ $215mn. Revenues from Top 10 clients formed 52.77% of total revenues Vs 57.79% in Q3FY12. Top 5 clients contributed 38.97% of revenues against 43.75% in the previous quarter. It was partly due to vendor consolidation and partly because the share of other clients increased. In Q4, Nordic Bank in Europe selected Intellect in a 15 year deal for liquidity management.”

“Intellect’s penetration in the market has been very encouraging which also reflects in 4 transformational deals the company won during the year including that of RBI which was ~ $55 mn. Q4FY12 saw dismal performance both on the services as well as product business. This might result in pressure on the stock performance in the near term, though low valuations might restrict sharp fall. We believe performance on both the businesses should bounce back in the coming quarters on the back of good existing order pipeline. We expect revenues to grow at a CAGR of 15.5% during FY12-FY14E. At CMP, the stock is available at 5.6x and 5x for FY13E and FY14E earnings respectively. We maintain a HOLD on the stock with a target price of Rs.158,”

Buy stocks of KPIT Cummins for long term

Chauhan told CNBC-Awaaz, "Investors should buy KPIT Cummins with a long term perspective. The stoploss should keep at Rs 96. The stock can touch Rs 120-135 in next 3-6 months time."

The company touched its 52-week high Rs 102.35 and 52-week low Rs 68.30 on 02 May, 2012 and 20 Dec, 2011, respectively. Currently, it is trading -1.81% below its 52-week high and 47.14% above its 52-week low

Buy stocks of Titan Industries at current level

Sukhani told CNBC-TV18, " L&T is a disaster. It is falling, it is now at Rs 1,200, it promises to come to Rs 1,000 again, it did that when we were in a bear market. But before any serious buying can take place, we have maybe a 20% decline here and for short sellers it is an excellent opportunity, would take a positional trade here, not just for today. You could buy puts for L&T and then just wait patiently. Together with BHEL, L&T is on the downside and the downside is likely to continue."

He further added, "Titan is a good chart. It made new highs on the back of news and suddenly we thought people won’t buy gold jewellery or whatever it was. It has started �" that was a dip, it was a decline. So we want to buy good stocks on dips and Titan qualifies almost perfectly."

"Yesterday we saw decent gains and those gains came after a narrow range and a breakout from that. This is a pattern that suggests new highs are coming. So Titan is a buy, we can see follow through today if suppose the markets start turning around during the day."

"Titan should be one of the biggest beneficiaries together with Cipla and HDFC Bank, so it is in my buy list. For people who want to make positions, buy Titan, hold on to it and you will see very decent gains even in a market that retreats."

Buy stocks of HDFC Bank at current level

Sukhani told CNBC-TV18, " Cipla has done well. It is more in a trading range, it goes down, find support just a little below Rs 300 and then rallies. Currently it is in a rally. So we want to go into the stock at least to the top of its trading range, which is about Rs 330-335 and we still have the advantage."

He further added, "If it crosses Rs 335, it breaks out of that range and that gives us more movement on the upside. So Cipla’s chart pattern suggests that it is bottoming out, it is probably willing to go higher. I think today Cipla should be on most people’s buy list because likely gains are going to come and fortunately it is not so affiliated with the index, it is a pharmaceutical company that has its own dynamics, so it should work well."

"I would be a buyer in HDFC Bank and more because the buying list is very small now while short selling ideas are coming on the charts very quickly and there are number of them. So we have a choice in when we want to go in a choppy market and say okay, we want the buys and sells to be balanced.”

“At this point of time, the list of stocks showing chart patterns that I can use to buy that list is small and HDFC Bank comes in it. So rather than say that okay I am expecting big gains in HDFC Bank which is not necessary, I am expecting that HDFC Bank will outperform the market. It is a stable security, so I would prefer to go long in it. In case the market does turnaround and go up, HDFC Bank should be an outperformer even then."

Buy stocks of Tata Motors

Sukhani told CNBC-TV18, "Tata Motors is the only where buying opportunity will arise. Today’s dip is not exactly a correction, it’s a one day down move, so the stock that qualifies for buying is probably Tata Motors even on a one day down move. For M&M you have to wait for a deeper correction but perhaps tomorrow if Tata Motors remains stable it becomes an opportunity to go long."

He further added, " Bajaj Auto and Ashok Leyland are shorting opportunities. I always have to make this explanation that short selling is not an easy task to do. Anyone listening should not simply go and blindly sell it but there is more downside in both stocks. You short sell, you keep a stop loss and in the unlikely event that the stock bounces back, you be disciplined enough to take that small loss and get out."

Buy stocks of Sun Television on dips

Sun TV has the best charts and that’s also the larger company, so for any trading focused on Sun TV. It has gone through a bear market, completed it. It’s not started up on a back of news; it was already in its uptrend. It’s an excellent stock for an investor and for a trader to buy on repeated dips, sell, and buy again."

He further added, " VIP Industries remains a short selling candidate. It’s been repeatedly coming on my short sell lists, the reason is very simple because it’s coming down. This market is now slowly turning over, it’s not just VIP, numbers of midcap stocks are now on sell lists

Buy stocks of Arvind at Rs 86

One can buy Arvind at Rs 86 with a stoploss of Rs 83. The level of Rs 92 is very important for the stock. If the stock breaks this level, then we can see stock at Rs 108 in coming days."

The company touched its 52-week high Rs 111.15 and 52-week low Rs 61.90 on 01 Nov, 2011 and 19 Aug, 2011, respectively. Currently, it is trading -22.81% below its 52-week high and 38.61% above its 52-week low

Stocks of BF Utilities may touch Rs 650

One can invest in BF Utilities with a long term perspective. Stoploss should keep at level of Rs 400. The stock may go upto Rs 650 in next 1 year time"

The company touched its 52-week high Rs 836.90 and 52-week low Rs 259.20 on 02 May, 2011 and 21 Dec, 2011, respectively. Currently, it is trading -49.46% below its 52-week high and 63.18% above its 52-week low

Buy Sterlite Technologies; target Rs 47

STL Q4FY12 net revenue surprised us as volume increased in power conductor segment however EBITDA and net profit were in line with our estimates. Net revenues grew by 18.6% YoY to Rs 809.3cr crore driven by mix of volume growth and net realization in both power conductor and telecom segment. EBITDA stood at Rs 66.7cr, robust growth of 36.3% YoY. Operating margins marginally improved by 100bps on account of 50bps margin improvement in power segment. However margins for telecom segment declined 260bps. Net profit increased by ~59% YoY on the back of improved operating margins. The company incurred Rs 3cr higher interest in the quarter due to increase in debt in the quarter. Order book stood at Rs 2300cr the end of Q4FY12. Management expects orderbook to gain momentum as PGCIL and major clients release new orders in FY13E."

"Revenues increased by 12.75 QoQ to Rs 536.3cr lead by higher sales volume. Power conductor segment reported volume growth of 7.4% QoQ to 35000MT in Q4FY12. However EBITDA /ton declined 5% QoQ from Rs 7890 to Rs 7450. EBITDA margins stood at 4.9% during the quarter. The management has guided improvement in EBITDA/ton of Rs 9000 to Rs 10000 for FY13E. Telecom segment reported robust growth of 39% QoQ to Rs 261.2crs. EBITDA margins improved by 90 bps on QoQ to 16.8%. Improvement in EBITDA margin indicates plant stabilization issues are over and the management has guided healthy operating margins for FY13. On the standalone basis interest expense has increased by 26% on sequential basis due to higher borrowing in Q4FY12. Going ahead the company plans capex of Rs 310crs for transmission project and Rs 150crs for its core business. We believe it would again stretch the balancesheet. We believe increase in debt raised for funding of expansion plans would be a spoilsport going ahead."

"STL reported sales growth of 20% YoY in FY12 however margins squeezed due to low margin order execution led by intense competition. We believe volume growth in both power and telecom segments are back on track as new plants are stabilizing. Strong growth in net sales will be driven by increase in volume as well as higher realization. However increase in interest expense will dent the net profit. Currently the stock is trading at 8.9x PE to its FY13E earnings. We maintain our BUY recommendation on the stock with a target price of Rs 47, valuing at 11x PER FY13E," says KRChoksey research report

Buy stocks of India Cements; target Rs 134: GEPL

India Cements, net sales for Q4FY12 grew by 11.8% Y-o-Y to Rs 11,185 mn. This was mainly driven by higher realisation. However, owing to sluggish demand in southern India especially Andhra Pradesh volumes for Q4FY12 remained flat at 2.53 mn on Y-o-Y basis. EBIDTA margins for Q4FY12 stood at 19.5% showing an increase of 136bps Y-o-Y. However, margin declined by 141bps Q-o-Q. Net profit for Q4FY12 grew by 17.4% Y-o-Y to Rs 649 mn. The strong growth was attributable to stable pricing in south."

"Blended realisation of cement per bag for Q4FY12 stood at Rs 221/bag showing a growth of 12% Y-o-Y. Thanks to the production discipline by players in southern India, result of which company has been able to report a stable set of earnings. EBIDTA margins for Q4FY12 stood at 19.5% showing an increase of 136bps on Y-o-Y basis. This was mainly on account of more than proportionate increase in realisation as against an increase in cost of production. On per bag basis the cost of production for Q4FY12 rose by 10.1% Y-o-Y to Rs 178, whereas realisation grew by 12% Y-o-Y to Rs 221. The power & fuel costs which accounted for 35.2% of the total expense rose by 26.8% Y-o-Y for Q4FY12 on per bag basis and the freight costs which accounted for 23.5% of total expenditure rose by 13.0% Y-o-Y on per bag basis. However, the raw material expense which accounted for 16.4% of total expenditure declined by 13.8% Y-o-Y on per bag basis and other expense which accounted for 14.6% also declined by 2.7% Y-o-Y. Net profit for Q4FY12 grew by 17.4% Y-o-Y to Rs 649 mn and net profit margins remained flat at 5.8% Y-o-Y, showing an increase of 28 bps driven by growth in realisation for cement."

"We maintain our target of Rs 134.5 arrived based both on replacement costs and EV/EBIDTA on a differential weightage and with a BUY rating. The results for the Q4FY12 have been above our estimates, however, the contribution from growth in volumes remained muted. Contrary to this strong pricing trend has helped company post good numbers. The demand for cement during the March’12 was muted in southern India especially in Andhra Pradesh. We expect the demand for cement to pick up from May’12 and remain strong till start of monsoon. However, owing to recent intervention by CCI on cartelisation we don’t expect a strong up tick in cement prices in Q1FY13. We believe that RBI’s move (50bps cut in repo) might trigger demand from housing and industrial segment in the near term. Coal production at Indonesian mines expected to commence operation from Q1FY13 might help company in reducing its coal costs and also with recent commissioning of its new 50 MW captive power plant at Sankari Nagar to aid ICL in further reducing the power and fuel costs," says GEPL Capital research report

Hold stocks of Persistent Systems; target price Rs 370

Persistent Systems reported higher than expected sequential revenue growth of 4.92% to $54.20mn mainly backed by growth in IP revenues and contribution from newly acquired ‘Openwave’ ($1.14mn). IP revenue grew by 38.00% QoQ and 35.00% YoY to $6.55mn. Persistent’s consistent endeavor to develop and acquire IPs in the field of traditional and modern technology areas and in the four key thirst areas of cloud, collaboration, mobility and analytics seems to be started yielding results. Even after having pressure of unfavorable INR movement, operating margin improve by 258bps sequentially to 25.85% mainly due to realization improvement driven by higher IP revenue and lower cost. The company able to reduce both operating and S&M cost by man power optimization and other cost cutting initiatives. But, net margin remain unchanged at 15.23% due to higher forex loss."

"The company’s utilization was at historic low levels of 71.70% mainly due to denominator effect. The company has added 1000 fresher in the full year of FY12 more tilted towards first half. But, total net manpower addition was only 270 people for the full financial year and this we believe, is a part of employee pyramid optimization initiatives taken by the management to reduce cost and increase productivity in tough times. Attrition is also started tapering off with the decrease in demand scenario and expected to reduce further over a period of time. Although, Persistent is expected to continue to work on high attrition levels compare to industry standards due to niche service focused business model and comparatively high quality manpower strength."

"We upgrade our USD term topline growth estimates to 13% from 10% earlier and expecting USD term revenue to reach to $235mn in FY13. Persistent’s unmatched expertise, partnership with global technology giants and lower product lifecycle would help the company to grow its traditional OPD business in tough times. Moreover, newly developed IPs would also help to grow nonlinear businesses simultaneously. But, due to the project specific business model and increasing dependence on non-linearity QoQ aberration is expected going forward. At the current market price of Rs 350, Persistent is trading at 8x of FY13 expected EPS of Rs 41.55. We upgrade our recommendation to HOLD with target price of Rs 370," says Way2Wealth research report

Buy stocks of Petronet LNG; target Rs 193

Petronet LNG’s (PLNG’s) Q4FY12 result was significantly lower than our expectation on the EBITDA and bottom-line front. Top-line registered a growth of 59.5% YoY to Rs63.7bn (Rs39.8bn) on account of 7.4% YoY growth in volumes, coupled with 49.5% YoY growth in realisations. EBITDA/TBTU witnessed an expansion, from Rs34.7/TBTU in Q3FY12 to Rs36.6/TBTU in Q4FY12. Bottom-line, during the quarter, stood at Rs2,451m (Rs2,062m), registering an increase of 18.8% YoY v/s our expectation of Rs2,965m during the quarter."

"Our calculation suggests that the company made gross marketing profits on spot volumes of Rs590m (12.0% of the reported gross margins for the quarter). The share of marketing margins in overall gross margins has declined from 28% in Q3FY12 to 12% in Q4FY12. We believe, PLNG has witnessed a 68% QoQ decline in marketing margins from US$1.39/mmbtu in Q3FY12 to US$0.44/mmbtu (Q4FY12). Volumes during Q4FY12 were at 135TBTU (145TBTU in Q3FY12); the same were lower than our estimate of 144TBTU on account of inventory build-up at the tanks."

"PLNG’s utility nature of business (stable re-gasification margins and term contracts), low regulatory risks (re-gasification margins are not currently under PNGRB’s purview) and expanding volumes on account of strong demand estimates, hold it in good stead. We believe the concerns over the regulatory intervention on the marketing margin front as well as PNGRB regulating Regas charges are exaggerated. However, the concerns are duly factored in the stock price. We maintain 'BUY', with a DCF-based target price of Rs 193/share, implying a P/E of 10.0x FY13E," says Prabhudas Lilladher research report

Accumulate stocks of ICICI Bank; target Rs 1,000

ICICI Bank, strong January 2012 stock performance unwound large part of the asset quality risks and despite robust asset quality reported, ICICI has underperformed peers mainly on low top-line momentum. Core fee growth (adjusted for dividends) has come off to 12%/7%/5% in Q1/Q2/Q3FY12, respectively. Also, loan growth adjusted for FX impact on international book has been weak at ~15%."

"Asset quality will continue to remain robust, with restructuring of Rs13-15bn expected in Q4FY12 in line with management guidance. Fee income growth adjusted for dividend from subsidiaries will continue to remain muted with flat YoY core fees expected in Q4FY12. Domestic and retail loan growth could pick up marginally but overall FX adjusted loan growth will remain muted."

"Near - term margin and asset quality outlook seem comfortable as absence of securitisation losses will aid margins by 10 - 15bps and low involvement in CDR pipeline cases will lead to lower restructuring, leaving top - line growth to be the key stock driver. We believe that low project finance and insurance - related fees in FY12 will create a very favourable base for FY13 fee income growth and though overall expectations of FY13 credit growth remains muted, some pick up in retail loan growth could help deliver respectable growth in FY13."

"ICICI has underperformed peers by ~15% post Jan/Feb - 12, mainly due to weak topline momentum. This was the key reason for our mid - Feb downgrade to ‘Accumulate’ from BUY (Target Price Rs 1000). We continue to believe in a re - rating for ICICI’s lending business due to improving core ROEs. However, stronger top - line momentum will be the key catalyst. Q4FY12 is unlikely to provide any positive surprise on top - line performance but a smaller base will most likely aid a recovery in FY13, especially in fee income," says Prabhudas Lilladher research report

Sell stocks of Chambal Fertilisers

Chambal Fertilisers and Chemicals is much lower than where it was. At Rs 92 we were all expecting that it’s going into some new highs finally after 15-20 years. That didn’t happen. At Rs 72 Chambal was down again on Monday. It had two up days, down again, but the broad trust of this stock is now on the downside. So Chambal is really a sell rather than anything else. First there are two things, it’s not a buy and if at all somebody wants to trade you should be looking to go short and to sell it rather than to do anything else."

He further added, "Technically United Phosphorous still is a sell. Charts will say okay. If anything needs to be done, you have to go and sell it. So United Phosphorous has that kind of a chart. There is nothing to suggest buying. But it’s fallen from Rs 160-100, so in reality I wouldn’t actually go and short it at this lower level. I would wait for a relief rally, wait for something else, but the trade here is to go and sell at some point

Sell Oriental Bank of Commerce at target of Rs 210

Oriental Bank of Commerce has been consistently making those lower highs, lower lows pattern which is the hallmark of a bearish market. So, that it did not change even when we were moving up, down. We were doing different things in the broad market, even in the Bank Nifty, but Oriental Bank was maintaining its downtrend. That downtrend is likely to now increase."

He further added, "Yesterday it made new lows. That’s not good news for the stock price. The chances are that it will have a target of Rs 210 initially and even slide below Rs 200. I wouldn’t be surprised if it does that. So there are two trades here. One is that you can sell Oriental Bank for the day, maintain a positional trade on the short side and the second is you can sell this and look to buy a stronger bank like ICICI Bank or maybe even State Bank and build up a spread trade. Both are valid, but it’s a sell in either case

Buy Hero Motocorp with target of Rs 2,290

Hero Motocorp is a green stock and we just want to buy it on every dip, on every correction. It corrected for three or four days. It went into a sideways range. Now it had a very good session, but that also got it to a resistance level."

He further added, "If the markets are going to rally, if they are going to maintain their position, Hero Moto is likely to be an outperformer, a stock that’s willing to breakout onto new highs and needs to be bought into. So for today it is an excellent trade. We can have a target maybe probably of Rs 2,290 even Rs 2,300 for the day trader. For the position trader you buy it and expect it to move further

Buy Indiabulls Financial around Rs 225-230

“Looking to the results posted by Indiabulls Financial, future looks good. Yes the going is going to be quite good and if one take the call on the stock from the PE multiple also I don’t think that it looks really too expensive.”

He further added, “One can expect a gradual rise from hereon, but we have seen infact the kind of profit booking or you may call it liquidations by the traders or the short term investors in the stock, which brings it down quickly as well leading to the higher volatility. So, one can keep a price target of Rs 225-230 which will make a good entry point may be with a view of couple of months or so.”

Sell stocks of HCC; target of Rs 17

“HCC’s Q4FY12 performance was dismal led by poor EBITDA margins (7.6% vs. our expectation of 12%) and higher net interest cost (Rs 122.8 crore vs. our estimates of Rs 109.9 crore). Consequently, the company reported a loss of Rs 54.2 crore vs. our estimates of Rs 22.2 crore. During the quarter, HCC has also applied for CDR cell for re-alignment of debt wherein the company is looking to apply for repayment structure of (2+8) wherein it is seeking 2 years of moratorium and 8 years of repayment period as well as marginal reduction in interest rates. With EPC business remaining a drag, Lavasa sales & execution pick yet to be seen and CDR issue is pending, we assign a SELL rating on the stock.”

“HCC topline came at Rs 1155.7 crore came higher than our estimates of Rs 1057.9 crore. It, however, reported net losses of Rs 54.2 crore vs. our expectations of Rs 22.2 crore in Q4FY12 mainly due to lower margins (7.6% vs. our expectation of 12%) and higher net interest cost (Rs 122.8 crore vs. our estimates of Rs 109.9 crore). The Board has approved for re-alignment of debt of HCC through CDR process. The same has been referred to CDR cell and consequently the proposal has been admitted. The company is looking to apply for repayment structure of (2+8) wherein it is seeking 2 years of moratorium and 8 years of repayment period. It is also looking for marginal reduction in interest rates as well as additional working capital. HCC expects decision on the same in next couple of months. The net Interest expenses at ~140% of EBITDA means that the operating profits are not enough to service debts. With the stretched working capital, lower operating margin and execution rate yet to pick up, HCC’s EPC business remains a major drag and a reason for concern.”

“At the CMP, the stock is trading at 1.2x FY13 P/BV. With the EPC business remaining a major drag due to stretched working capital, sluggish execution, and clarity on debt restructuring yet to emerge, we believe that stock would continue to remain under pressure. We have assigned a SELL rating to the stock with a target price of Rs 17/share,” says ICICIdirect.com research report.

Buy stocks of Axis Bank target of Rs 1380

“Axis Bank’s Q4FY12 NII grew by 26.2%yoy to Rs21.5bn, inline with consensus expectations. However driven by lower provisions, net profit at Rs12.8bn was ahead of consensus/our expectations. While advances grew by a strong 19.2% yoy (14.1%qoq), deposit growth was relatively lower at 16.3% yoy (5.5% qoq). Resultantly CD ratio increased significantly from 71.3% in Q3FY12 to 77.1% in Q4FY12helping the contraction in NIM’s remain limited to 20bps qoq to 3.1%, inline with our expectations. The bank surprised positively on the balance sheet front as GNPA declined by 5.7%qoq. Stable slippages at Rs5.1bn and substantially higher recoveries at Rs5.9bn (Rs1.3bn avg rec/upgradation in earlier two quarters) led to the improvement in asset quality. Resultantly the provision cover also improved to 80.2% from 75.3% (incl tech write off) in previous quarter. However the restructuring during the quarter was slightly on the higher side at Rs5.9bn, as against the run rate of Rs3bn in last two quarters.”

“The bank’s advances grew by a strong 19.2%yoy to Rs1.7tn led by strong growth in Retail and large corporate book. While retail book grew by a stellar 35.3%yoy to Rs376bn, large corporate book grew by a healthy 19.9%yoy to Rs911bn. The growth in retail book was driven by strong growth in all the segments (ex personal loans); mortgages which constitute 75% of the total retail book grew by 49.3%yoy to Rs282bn. The large spike in the agriculture loans was more seasonal in nature for meeting year end PSL targets. However, since as % of last year’s loan book the agricultural loans stood at 12.2% vs 16% last year, we believe that PSL targets are still way off the norm and may continue to put pressure on NIMs next year.”

“While Axis Bank’s performance for Q4FY12 was robust and also positively surprised on NPLs, we are still factoring in lower 13.4% growth in earnings next year for few reasons (1) NIMs may continue to remain under pressure due to shortfall on PSL requirements which may be substituted with RIDF bonds and (2) the downgrading in the loan rating profiles may spike up restructuring and consequently provisions. We believe that these two can pose further risks to our earnings estimates. But still valuations at 1.7x/1.4x FY13E/FY14E are not unreasonable. Maintain accumulate with TP of Rs 1380,” says Emkay Global Financial Services research report

Buy stocks of Nestle India target of Rs 5110

“Nestle Q1CY12 performance remains below expectation, largely led by lower then expected revenue performance. Revenues grew 13.1% yoy to Rs20.5 bn, lower then our expectations of Rs21.5 bn. It remains impacted by discontinuation of business channels (CSD business) and business (‘Eclairs’ in confectionary) and capacity constraints. Hence, the RIG growth remains muted in the quarter, our guesstimate is 5% yoy. Consequently, Ebidta at Rs4.4 bn (+17.4%) and APAT at Rs2.7 bn (+7.8%) is below expectation.”

“Domestic business featured over Exports business. Domestic business grew 13.7% yoy to Rs19.5 bn. This was impacted by channel mix optimization, but benefited from richer product mix. Whereas, Export business grew by mere 3.3% yoy to Rs1.1 bn, impacted by 10.1% yoy decline in sales to Nestle affiliates. Nestle gained from richer product mix alongside channel optimization and higher price realization in product portfolios. Consequently, gross margins expanded by 300 bps yoy to 54.2% and Ebidta margin expanded by 80 bps yoy to 21.7%. This translated into 17.4% yoy growth in Ebidta to Rs4.4 bn, partially offsetting lower revenue growth. Tax incentives in Pantnagar facility reduced from 100% of profits to 30% of profits. The tax outgo increased 290 bps yoy from 29% of PBT to 32% of PBT. This curtailed the APAT growth to 7.8% yoy in the quarter.”

“Significant re-rating in recent months despite lower earnings growth has resulted in premium valuations by discounting CY13E earnings at 36X. Though, out performance from CMP of Rs4940/Share is difficult, stock would find comfort in attractive FCF yield of 4% discounting - CY13E FCF of Rs18.9 bn. Also, Nestle is �" in-sync with our theme for preference for agri-sensitive input and urbancentric companies. We like Nestle, with its strong brand equity and market position and remain positive on the long term prospects of the company. Nestle would continue to command premium valuations, considering its strong business model and lack of listed players in the packaged food and beverage segment. We maintain our ACCUMULATE rating on the stock with a target price of Rs 5,110/share,” says Emkay Global Financial Services research report.

Hold stocks of India Cements target of Rs 101

“India Cements, though southern cement prices in 4Q remaining strong, (+1% qoq), India Cement’s (ICEM) realisation came in flat qoq at Rs4245/t (+11.4% yoy) lower than estimates of Rs4345/t. This coupled with a 1.4% qoq increase in costs led to a sharply disappointing profitability performance from ICEM as the 4Q EBIDTA/t at Rs819 came in significantly below our (Rs981/t) & street estimate. Hence EBIDTA for the quarter at Rs2.15 bn though up a healthy 20% yoy came in lower than estimates (Rs2.7 bn). Consequently APAT for the quarter at Rs649 mn (+19% yoy) also came in lower than estimates. Cement revenues grew a modest 13.6% driven entirely by 11.4% yoy improvement in cement realisation even as the volumes grew at a tepid pace of 2% yoy.”

“On the cost front ICEM continued to witnessed cost pressure as its cost increased 1.4% qoq to Rs3426/t. This is even as we saw declining cost trend for other cement companies in the quarter (Ultratech’s cost -1% qoq, ACC’s cost -6% qoq, Ambuja’s cost - 8.2% qoq). The cost increase was largely driven by 4% sequential increase in freight cost led by higher lead distance & marginal effect of rail freight hike. Even staff cost on an absolute basis increased (+26% qoq) led by provisions for directors remuneration and unclaimed leaves. We expect cost pressure to continue for ICEM as the recent cost increases like railway freight hike & excise duty hike will put further pressure. However the cost pressure is expected to ease in H2FY13 as the company is expected to draw coal requirements from its captive mines in Indonesia (First Coal expected in Q2FY13).”

“4Q cement demand in the southern region jumps ~8-9% showing some signs of revival. However we remain uncertain on the sustainability of this uptrend given the sporadic upsurge of Telangana issue in AP. Given this backdrop we believe that ICEM’s valuations at PER 11x, EV/E of 5.9X leaves little upside considering that ICL’S RoCE (10.3% for FY12) is still below the cost of capital - Maintain HOLD,” says Emkay Global Financial Services research report.

Hold stocks of Wipro target of Rs 461

“Wipro, India's third largest software exporter reported 2% sequential fall in consolidated revenues to Rs98,691 mn (down by ~11% from our estimates) for the fourth quarter of FY’12. IT services revenues de-grew ~0.24% QoQ to Rs75,900 mn in INR terms but grew ~2.1% QoQ to USD1,536 mn in USD terms due to ~0.4% increase in onsite price realization and ~1.4% increase in offshore/offsite price realization on a QoQ basis. IT revenues increased by ~1.3% sequentially on a constant currency basis. On a constant currency basis, onsite realizations were flat and offshore realizations were up ~1.1% on a QoQ basis. Though, the company might have disappointed our estimates (including guidance) but the restructuring that the company started a year ago (as we mentioned in our IC) seems to be delivering results.”

“Wipro witnessed growth only in 2 out of 6 verticals exceeding the overall growth rate of the Company. Though the Company sees seeing positive feedback from customers and employees on the restructuring approach, it is taking greater than estimated time to actually boil down to financials. Revenue guidance does not seem to be good indication especially after a sequentially flat to ~1% revenue growth guidance by Infosys. However, we believe volume growth was weak, with high debtor days and lower cash conversion ratio. Wipro’s onsite volumes grew ~0.2% QoQ in Q4FY’12, while offshore volumes rose 1.1% sequentially. Its major growth drivers were the verticals like Retail & Transportation (5.2%), Energy & Utilities (~5.1%) and the geographies like APAC & Emerging Markets (6.2% QoQ in constant currency). The contribution from fixed-price projects declined by 30 bps QoQ to 45.2%, while the onsite share of revenue dipped by 50 bps to 53.9%.”

“OPM remained flat at ~20% which led to a similar ~1% QoQ fall in operating profits to Rs19,611 mn. Net profits was up by ~2% to Rs14,809 mn aided by increase in other income, decline in interest costs and muted increase in depreciation charges although tax rate inched up by 48bps to 21.22%. During FY’12, revenues increased by ~21% to Rs3,72,973 mn; OPM worsened by 50bps to ~19.8% and the resultant operating profit grew at a lower 13% to Rs75,729 mn crore. Net profit grew only ~5% to Rs58,745 mn on account of tax increase, to an effective rate of ~19.8% in FY’12 end.”

“We cut our FY’13E EPS estimates by ~4%, however, that’s not final, positive induction in Q1FY’13E could set us to change our stance and views for FY’13E as its restructuring showing results quite fast, induces confidence for a long-term period. At CMP, the stock trades at a P/E & P/BVPS of ~13.0x and ~3.1x of FY’13E EPS & BVPS. We re-iterate HOLD, re-affirming to our earlier TP of Rs461 from (a potential upside of ~13.8% from current levels), factored over a P/E & P/BVPS of ~14.9x and ~3.6x using FY’13E EPS of Rs31 & BVPS of Rs126,” says R K Global research report.

neutral on Hexaware Tech

“For 1QCY2012, Hexaware reported a healthy set of results. Major highlights of the results were whopping 6.6% qoq volume growth even in a seasonally soft quarter for IT companies. Hexaware has been outperforming in the mid-cap space since eight quarters by reporting a scorching 7.7% CQGR. Management has been outperforming its guidance every quarter and has maintained CY2012 yoy revenue growth guidance of at least 20%. We expect the company to continue its revenue growth on the back of increasing traction for enterprise services as well as continue its operational exuberance. We remain Neutral on the stock.”

“For 1QCY2012, Hexaware reported USD revenue of US$88mn, up 4.7% qoq, led by 6.6% qoq volume growth. In INR terms, revenue came in at Rs438cr, up 1.5% qoq. The company’s EBITDA and EBIT margins declined by 61bp and 77bp qoq to 22.4% and 20.8%, respectively, majorly due to qoq INR appreciation against USD. PAT for the quarter stood flat qoq to Rs88cr.”

“Hexaware signed two deals during 4QFY2012, each worth US$10mn plus. Also, management indicated that it is in the final stages of signing two large deals �" each worth US$25mn plus. Management intends to hire 1,500 net employees in CY2012 with 600-700 of them being freshers. Management has maintained the company’s CY2012 yoy revenue growth guidance of at least 20% i.e., above US$370mn. We expect USD and INR revenue to post a scorching 18.1% and 20.5% CAGR over CY2010�"12E, respectively. Hexaware has adequate levers to expand its margins- such as strong volume growth, improvement in utilization level, broadening of the employee pyramid and rationalizing SGA costs �" which can elevate its EBITDA margin to 19.0% for CY2012 from 18.2% in CY2011. Thus, we expect EBITDA and PAT to post a CAGR of 21.7% and 9.5%, respectively. We value the company at 12x CY2013E EPS of Rs10.7, which gives us a target price of Rs128. The stock price has run up significantly and we see limited upside from current levels. We maintain our Neutral rating on the stock,” says Angel Broking research report.

Buy stocks of TCS at current level

"TCS wasn’t a one day wonder; it didn’t go up one day and then started moving in a trading range and giving up its gains. After a day of rest it renewed its advance in a market that was listless. So the market is giving significant thumbs up to TCS that resistance levels have already been broken after the gap up and it seems that new targets are being set for the stock. So TCS is a buy today with a target at Rs 1,225 for the short-term but for the longer term it could be higher."

He further added, " Voltas is a slightly dicey stock to trade in because sometimes it also gives those mild upswings but the broad pressure on Voltas is on the downside. So Voltas is a short sell. I would expect it to move lower probably crack Rs 100 at some point, that could be a target for the day trader but expect Voltas to go below Rs 100 again."