Buy stocks of Narmada Gelatines; target of Rs 148

“Narmada Gelatines (NGL), a member of Jumbo Group, formerly known as Shaw Wallace Gelatines was incorporated on 13 Jan.'61 as Leiner-Knit Gelatin Company. In 1978, the original promoters P Leiner & Sons fully divested in favour of Shah Wallace & Company and the name was changed to the Shaw Wallance Gelatines. The plant located at Jabalpur has capacity of 2, 400 tpa of gelatin.”

“During Q4FY12, net profit has surged by 28.9% to Rs3.6 crore on 18.2% higher sales of Rs30.5 crore. OP and NP margin stood at 18.8% and 11.6% as against 18.1% and11.0% respectively in Q4FY11. (YoY). EPS for Q4FY12 works out to Rs9.0 During FY12, net profit advanced by 16.8% to Rs11.1 crore on 17.3% higher sales of Rs106.7 crore. OP and NP margin stood at 16.8% and 10.4% Vs 17.4% and 10.4% respectively in FY11. FY12 EPS works out to Rs27.8 Vs Rs23.8 in FY11. A dividend of 45% has been proposed.”

“Around 85% of the use of gelatine in the country is in the pharmaceutical industry while the balance is for edible and other uses. From a market size of around $7 billion, the Indian pharmaceutical market is projected to grow to about $20 billion by 2015 maintaining 12.3% CAGR. The size of edible oil market in India is to the tune of Rs750 billion. The industry is growing at the rate of 5-6% per annum. The growth of these industries augurs well for the future prospects of Gelatine industry. At the CMP of Rs113, the share is trading at a P/E of 3.4x on FY13E and 3.0x on FY14E. We recommend BUY with a target price of Rs148 in the medium term,” says Sunidhi Securities research report.

Buy stocks of GAIL India; target of Rs 338

“GAIL India has corrected sharply from its April 2012 high of Rs376 to a low of Rs304 last week. Since last few trading sessions, the stock has been moving along with the support of its short-term trendline. We believe the rebound from the above mentioned low is still in progress and further upside seems on the cards. The daily RSI is exhibiting positive divergences. We recommend traders to buy the stock for a target of Rs350 (50- DMA). Based on above mentioned observations, we recommend buy on GAIL above Rs326 with stop loss of Rs320 for an initial target of Rs338,” says IIFL research report.

Sell stocks of JSW Steel; target of Rs 568

“JSW Steel’s standalone net sales increased 34.3% YoY to Rs95.4bn primarily on account of sales volume growth. Sales volume of saleable steel grew 33.3 % YoY and 21.1% QoQ to 2.31mn tonnes. Crude steel production grew 25.7% YoY to 2.07mn tones. JSW Steel’s standalone EBITDA declined 0.1% YoY and increased 31.9% QoQ to 16.5bn. The QoQ increase in EBITDA is primarily on account of higher sales volume and lower raw material costs. EBITDA margins improved 140 bps QoQ to 17.3%”

“During the quarter, there were mark-to-market foreign exchange gains of Rs2bn on acceptances related to raw material. With the rupee depreciating back to above 54 levels against the dollar, forex gains related to acceptances and foreign exchange borrowings would get reversed. Infact with the rupee’s downward trend sustaining on account of an escalating current account deficit and muted capital inflows, unrealised FX losses on acceptances in Q2FY12 would likely get realised as they come up for payment. Also, rupee depreciating beyond Rs53 is likely to result in further mark-to-market losses on foreign exchange borrowings and acceptances that cumulatively occurred till Q3FY12.”

“JSW Steel’s subsidiaries’ performance were a mixed bag. The US operations posted an improved performance, with the capacity utilisation of the plate mill and pipe mill rising to 44% and 16% in Q4FY12 as compared to 28% and 13% in Q3FY12. The US operations posted a net profit of $27.7mn in Q4FY12 as compared to a net loss of $10.1mn in Q3FY12; however, the profit is on account of an one-off insurance claim. The iron ore operations in Chile reported a net loss of $0.85mn on account of lower volumes at 101199 tonnes (down 31.6% QoQ). Although JSW Ispat’s losses decreased to Rs1.4bn in Q4FY12 as compared to a net loss of Rs3.1bn in Q3FY12, in our opinion, it is far away from a turnaround as capex projects (captive coke, power and pellet) to improve competitiveness would take over 2-3 years. Overall, subsidiaries continue to be a drag on JSW Steel’s consolidated results. JSW Steel’s adjusted standalone net profit declined 26.6% YoY and increased 263.0% QoQ to Rs6.1bn. The YoY decline was on account of higher interest and depreciation costs. JSW Steel’s consolidated adjusted net profit declined 23.4% YoY and increased 164.6% QoQ to Rs6.1bn.”

“Going forward, with the rupee likely to remain under pressure, unrealised foreign exchange losses on acceptances would materialise. Inadequate iron ore availability, likely foreign exchange losses, slowing domestic investment growth and high debt would continue to weigh on JSW Steel going forward. We reduce our EV/EBITDA multiple to value consolidated JSW Steel (ex-Ispat Industries) from 5x FY13E to 4.5x, which gives a value of Rs536.7. To this, we add the value of its investment in Ispat Industries at Rs31.7 (0.3x the equity investment). Our fair value for JSW Steel comes at Rs568. We decrease our target price per share for JSW Steel by 19.0% to Rs568 from Rs701, implying a potential downside of ~4.3% from the last closing price. The risk-reward tradeoff for JSW Steel remains unfavourable. We maintain our Sell rating on JSW Steel,” says Aditya Birla Money research report.

Buy stocks of eClerx Services; target of Rs 874

“eClerx came out with its Q4FY12 results, which were slightly below our estimates. The company has registered a revenue growth of 0.4% QoQ to $25.5mn (SPAe: 26.1mn). The FY12 EPS of INR 54.9, however exceeded our guidance on the back of improvement in margins from 39.3% to 40.1% due to INR depreciation. We expect Agilyst to start adding to the topline from Q1FY13 with an annual revenue run-rate of $14mn. On the back of inorganic growth push, we expect the company's FY14 EPS at INR 73.”

“The company reported a moderate volume growth of 0.4% QoQ in Q4FY12, with no change in pricing. The revenues for FY12 at $97.5mn were slightly below our expectations of $98.1mn. This could be attributed to the volatility in the top-5 clients spending, which continues to contribute 85%+ to the company's topline. However revenue at INR 4,728mn (SPAe: INR 4,650mn) grew at 38.2% helped by 7% dip in INR. eClerx has $94.3mn outstanding hedges for FY13/14 at INR 49.1/$ and cash and equivalents of INR 2,686mn or INR 92.4/share. eClerx has improved its EBITDA Margins from 39.3% in FY11 to 40.1% in FY12 leading to an EPS growth of 34.9% to INR 54.9. The margins for Q4FY12 however, declined sequentially by 600bps to 38.2% due to (i) One time G&A spike by 190bps on the back of M&A transaction cost and decommissioning of an old facility (ii) ongoing increase in S&M investments by 330bps and (iii) INR appreciation.”

“We expect the organic growth to be 6% in FY13 due to higher volatility in Top 5 client's spending and slower pick up in non-top-5 clients causing a lack of revenue generation opportunities. However with Agilyst starting contribution by Q1FY13 we expect the company's topline to grow by 30% & 18% in FY13 & FY14. On the margins front we expect eClerx to come off a bit to 35.5% & 36.7% in FY13 & FY14 due to (i) Pricing pressure from top-5 clients and (ii) wage inflation (10.5% offshore and 3% onsite) though partially offset by INR depreciation in H1FY13. Thus, on the back of inorganic growth coupled with lower margins, we expect EPS to grow at 15.2% CAGR over FY12-14E vis-à-vis 37.5% CAGR over FY08-12. The company had enjoyed premium valuation due to its higher than industry margins, growth rates and being the only listed Indian KPO; but with tapering growth we have risk-adjusted our valuation multiple, lower by 15% to 12x, continuing to recommend BUY for the stock, with a 2 year target price of INR 874,” says SPA Research report.

Buy stocks of City Union Bank; target of Rs 70

“In Q4 FY12, City Union Bank’s (CUB) NII grew 14.7% YoY to Rs 1.4bn- 7.8% higher than our estimates. NIM fell to 3.39% from 3.79% in Q4 FY11 and rose from 3.24% in Q3 FY12. Higher rise in yield on funds (37bps QoQ) as against cost of funds (20bps QoQ) aided margin (on sequential basis) and core interest income. Other income grew 36% to Rs 612mn from Rs 450mn in Q4FY11 (primarily, on account of 115% YoY jump in treasury income and 135% YoY rise in forex gains). Hence higher core interest income and non-fund income resulted in higher than expected 17% YoY jump in operating profit to Rs 1.14bn (Dolat est: Rs 1.0bn). Decline of 18% YoY in total provisions (excluding tax expenses) to Rs 295mn & 53% YoY decrease in NPL provisioning to Rs 193mn further aided bottom-line growth. It reported a bottom-line of Rs 720mn compared to our estimates of Rs 559mn and consensus estimate of Rs 615mn.”

“During the quarter, asset quality improved with net NPA ratio declining by 7bps QoQ & 8bps YoY to 0.44% and gross NPA ratios declining by 16bps QoQ & 20bps YoY to 1.01%. Provision coverage ratio remains stagnant at 77%. CUB’s gross slippage ratio decreased to 1.17% from 2.2% in Q3 FY12 and 2.68% in Q4 FY11. The total outstanding restructured loan book at the end of Q4 FY12 stood at Rs 2.7bn (slight decline from Rs 2.8bn as on Q3 FY12). During this quarter, the bank has not restructured any accounts.”

“In FY13, in our view, the bank’s business would expand by 25.3% YoY with slight drift in margin. During FY14, we estimate CUB’s RoAA and RoAE at 1.5% and 20.9% respectively. We revise our earnings estimates upward for FY13 and FY14 by 16.0% and 20.2% respectively and revise our price target by 16.7% to Rs 70. We reiterate our Buy rating on the stock with a target price of Rs 70 at 1.59x adjusted book value FY14. At current price, it quotes at 1.3x and 1.1x ABV FY13 and FY14 respectively,” says Dolat Capital research report.

Buy stocks of Godrej Consumer; target of Rs 612

“Godrej Consumer Products (GCPL) is a leader among India's Fast Moving Consumer Goods (FMCG) companies, with leading Household and Personal Care Products. The company employs 950 people and has three state-of-the-art manufacturing facilities at Malanpur (M.P.) Guwahati (Assam) and Baddi (H.P.).Their focus is on providing their customers with innovative, value for money solutions for meeting their daily needs and improving the quality of their life. This is achieved through the brands the company markets. They also have a strong emerging presence in markets outside India. As part of increasing our global footprint, we recently acquired 51% rights in the Darling group in Africa. With acquisitions of Tura, a leading medicated brand in West Africa, Megasari Group, a leading household care company in Indonesia and Issue Group and Argencos, two leading hair colorant companies in Argentina, Keyline Brands in the United Kingdom, Rapidol and Kinky Group, South Africa and Godrej Global Mideast FZE, we own international brands and trademarks in Latam, Europe, Australia, Canada, Africa and the Middle East.”

“Godrej Consumer products has posted a consolidated net profit of Rs. 1926.50 million for the quarter ended March 31, 2012 whereas the same was at Rs.1416.80 million for the corresponding quarter last year, a rise of 35.98%. Net sale has increased by 31.59% to Rs. 13249.40 million for the quarter ended March 31, 2012 whereas the same was at Rs.10068.60 million for the quarter ended March 31, 2011. Total Income marginally increased to Rs.13433.20 million for the quarter ended March 2012. The EPS is stood at Rs.5.66 for the quarter ended March 2011.”

“At the current market price of Rs 542, the stock is trading at 20.28 x FY13E and 17.44 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.26.73 and Rs.31.07 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 28% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 15.94 x for FY13E and 13.63 x for FY14E. Price to Book Value of the stock is expected to be at 4.92 x and 3.81 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 612 for medium to long term investment,” says Firstcall Research report.

Buy stocks of Godrej Consumer; target of Rs 612

“Godrej Consumer Products (GCPL) is a leader among India's Fast Moving Consumer Goods (FMCG) companies, with leading Household and Personal Care Products. The company employs 950 people and has three state-of-the-art manufacturing facilities at Malanpur (M.P.) Guwahati (Assam) and Baddi (H.P.).Their focus is on providing their customers with innovative, value for money solutions for meeting their daily needs and improving the quality of their life. This is achieved through the brands the company markets. They also have a strong emerging presence in markets outside India. As part of increasing our global footprint, we recently acquired 51% rights in the Darling group in Africa. With acquisitions of Tura, a leading medicated brand in West Africa, Megasari Group, a leading household care company in Indonesia and Issue Group and Argencos, two leading hair colorant companies in Argentina, Keyline Brands in the United Kingdom, Rapidol and Kinky Group, South Africa and Godrej Global Mideast FZE, we own international brands and trademarks in Latam, Europe, Australia, Canada, Africa and the Middle East.”

“Godrej Consumer products has posted a consolidated net profit of Rs. 1926.50 million for the quarter ended March 31, 2012 whereas the same was at Rs.1416.80 million for the corresponding quarter last year, a rise of 35.98%. Net sale has increased by 31.59% to Rs. 13249.40 million for the quarter ended March 31, 2012 whereas the same was at Rs.10068.60 million for the quarter ended March 31, 2011. Total Income marginally increased to Rs.13433.20 million for the quarter ended March 2012. The EPS is stood at Rs.5.66 for the quarter ended March 2011.”

“At the current market price of Rs 542, the stock is trading at 20.28 x FY13E and 17.44 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.26.73 and Rs.31.07 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 28% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 15.94 x for FY13E and 13.63 x for FY14E. Price to Book Value of the stock is expected to be at 4.92 x and 3.81 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 612 for medium to long term investment,” says Firstcall Research report.

Buy stocks of SBI; target of Rs 2407

“SBI delivered strong bottom line of Rs 4,050 crore growing 24.1% Q-o-Q above our and street expectation, driven by robust NII growth, sharp pick up in non interest income and improved asset quality. NII grew strongly 45.2% y-o-y and 2.1% q-o-q driven by healthy NIM and steady loan growth 15.8% y-o-y. Core fee income witnessed strong sequential jump (59.6% Qo- Q) mainly due to year end transaction fees and strong growth in government business. Trading loss came down sharply from Rs1,090 crore in Q3FY12 to Rs26 crore due to relatively better market conditions. Cost to income ratio declined 314bps Q-o-Q to 43.4% reflecting improving operating efficiency. Despite sharp improvement in asset quality, the bank saw marginal reduction in loan loss provision, aiming to improve overall coverage ratio. Advances and deposits growth were 15.8% y-o-y and 11.7% y-o-y respectively mirroring industry trend. CASA ratio remained at healthy levels 43.9%.”

“Asset quality saw marked improvement; slippage ratio came down from 4.2% in Q3FY12 to 2.1% in Q4FY12. However the bank has restructured loans amounting to Rs5,134 Cr (0.6% of advances), one of the lowest in peers during the quarter. Gross and Net NPAs stood at 4.4% & 1.8% respectively with coverage ratio of 68.1%. Consolidated PAT grew 37.2% Rs15,343 crore in FY12. Maintain BUY.”

“Net interest income showed strong momentum growing 45.2% y-o-y and 2.1% q-o-q led by steady loan growth 15.8% y-o-y and healthy margins. Net interest margins came off 16bps Q-o-Q to 3.89% largely attributable to higher funding costs and stable asset yields. The management has guided net interest margins to sustain at ~3.75% with upward bias in FY13. We expect NII to grow 13.4% CAGR over FY12-14. Loan growth has been at healthy levels of 15.8% y-o-y & 2.8% Q-o-Q driven by SME advances, agricultural and retail. Retail loan growth has been at healthy level of 10.8% y-o-y and 4.1% q-o-q largely driven by strong growth in auto loans and housing loans. The management has indicated 16-17% loan growth and 15-16% deposit growth in FY13. The bank has maintained superior CASA ratio at 44% despite challenging macro environment and system level contraction in current account deposits. CASA Deposits increased 12.0% y-o-y and 2.8% y-o-y reflecting superior power of franchise.”

“SBI has delivered strong operating performance led by steady NII, strong non interest income and marked improvement in asset quality. Strong pick up in non interest income and better than expected asset quality are key positives from the result. We expect SBI to deliver 23.2% CAGR in earnings over FY12-FY14 driven by steady NIMs, industry line loan growth and stable provisions. Higher-than-expected slippages and credit costs due to further deterioration in macro environment are key investment risk in the stock. At Rs 1,942 the stock is trading 1.1x FY13 core book and 6.9x FY13 core earnings; We maintain our BUY rating on the stock with a target price of Rs 2407,” says KRChoksey research report.

Buy stocks of Sesa Goa on 2-3% decline

Tulsian told CNBC-TV18, “On Tata Power I have said yesterday also that probably looking to the results which are seen to be quite dull largely because of its Mundra Ultra Mega Power projects. Probably one can look only after results and it is better if it falls to maybe at about Rs 85-86 because swiftly we have been seeing the positive view remaining on Tata Power and again the moment it falls to those levels may be after some event and a base is discovered one can look to enter into the stock at those levels.”

He further added, “Sesa Goa, a while back we have discussed that in fact rupee weakening is seen quite positive for the non ferrous metal stocks and Sesa Goa is since having the restructuring move of merger of the Sterlite industries with Sesa Goa by the virtue of which they will be acquiring the stake in Hindusthan Zinc as well as in Balco that should been seen positive for them. Even in of their core operations of the iron ore business and that is likely to perform well so taking that call also maybe a fall of about 2-3% from hereon makes it a good buy at those levels.”

“We have been seeing weakness in all the ADAG stocks just a day before because of the optically better results seen for the Reliance Capital though I was not very happy because if you see the finance and investment sector having posted an EBIT of Rs 360 crore against the Rs 370 crore for whole of the year. We have seen some buying interest coming back into the stocks which were largely in fact in my view have been on account of the short covering because the way they have all been correcting for last whole of the May series. I think the same trend is likely to continue because the results of Reliance Infra, Reliance Communications, Reliance Power and other stocks are due. I don’t think that any kind of excitement or the positive surprises will be seen from all three companies. So, negative view till the expiry on all the stocks of ADAG.”

Buy stocks of Wockhardt around Rs 600- 620

Tulsian told CNBC-TV18, “Wockhardt has posted good results. If you exclude the exceptional loss of about Rs 450 crore comprising on 2-3 heads, the company has posted good numbers because if you see the EBITDA margin has been on improvement but the kind of run up which we have seen into the stock price, it used to rule at below Rs 300 in the fag-end of January 2012 about three-four months when the stock was recommended by me near Rs 300.”

He further added, “It is difficult to accept now or to give a buy call on the stock at Rs 700 because generally the stock has been remaining quite strong if you see whole of the month of May, it has not corrected below Rs 650 and swiftly it has moved back to Rs 710-715 level but the kind of volatility, which we see, I won’t be surprised to see share price again falling back maybe to about Rs 600-620 where the buying can be initiated but yes, the results have been very good of Q4 except for the exceptional loss of about Rs 450 crore.”

Buy stocks of BHEL at lower levels

Baliga told CNBC-TV18, “BHEL is one company which I don’t think one should look at it from quarter to quarter. One has to look at the possibly the next 1.5-2 years and we have been quite positive on BHEL and this correction which we have seen in the past 1-1.5 months clearly we are utilizing it to buy at these lower levels.”

He further added, “We have also been telling our clients all through that this may not be a market where one can invest and just hold on for the returns. One really needs to utilize all these opportunities to trade and the market has given enough opportunity in the last 1-1.5 years. We have seen those decent bounce backs where one could have booked out to a certain extent not completely and that’s exactly what we did when the markets had bounced back in the recent past 5400-5500. We were telling people to get into cash and we were sitting on cash and this is a time one should be investing. Again when you see levels of 4750-4800 after seeing these levels of 5000-5050 we could see again a correction. One should again start investing at that point of time.”

Sell stocks of Thermax

“Thermax, Cons. Order backlog for FY12 stood @Rs.48bn down by 25% yoy & 17% qoq, reducing its revenue visibility to less than a year. The Energy segment contributed ~80% whereas the Environment segment contributed the remaining. Order inflows for FY12 stood @Rs.46bn drastically down by 23%, reflecting the concerns prevalent in the economy. Cons.Net revenues for FY12 registered a growth of 15% indicating a better than expected performance from the subsidiaries but the resultant PAT margins were down @6.6% due to continued losses from the Chinese subsidiary & the cost overruns from the Meenakshi order in its Thermax Instrumentation Ltd. subsidiary.”

“Standalone net sales have grown by 10% due to better than expected execution from the Environment segment which has grown by 12% yoy & the Energy segment which has grown by 7% yoy. Operating margins for the Energy segment has improved marginally @10.8% whereas for the Environment segment it has declined marginally @12.5%. Raw material cost as a % of sales has declined from 72% to 70% on account of improved manpower productivity which has also helped reducing its employee costs as a % sales. Its overall expenditure has remained flat @90% with stable operating margins @11%. Depreciation cost has remained flat but its interest cost has almost doubled which has reduced its PAT margins @7.7% but overall PAT has grown by 6% yoy. At its CMP of Rs.420, we maintain our SELL rating, in line with our previous recommendation, with the stock trading at 13x FY13E EPS of Rs.33, we believe it to be high given the lack of clarity on order inflows. Although exploring oppurtunities in the African & the Middle East market could benefit Thermax in this adverse domestic slowdown,” says Way2Wealth research report.

Buy stocks of Parekh Aluminex; target of Rs 390

"PAL, a Mumbai based company established in 1994, is engaged in the production and sale of Aluminium Foil Containers (AFC) together with lids or covers and Aluminium Foil Rolls (AFR). It came out with its IPO in 1997. PAL is the largest manufacturer and exporter of Aluminium Foil Containers (AFC) and also one of the biggest manufacturers in Aluminium Foil Rolls (AFRs) and Aluminium Lids, in India. Its two plants are located at Union Territory of Dadra and Nagar Haveli, India. From January 2009, PAL has been adjudged as 100 per cent EOU."

"PAL manufactures these products with various sizes, shapes and microns. Aluminium Foil containers are utensils, pans, trays, packing materials made from Aluminium Foil. AFC’s has increased its capacity (casseroles/trays & containers/dishes) from 4, 000 million to 5, 750 million pieces per annum; AFR’s from 75 million to 98 million pieces per annum; and Aluminium lids from 1200 million to 1, 590 million pieces per annum. The products find its application in packaging of food items in travel industry such as airlines, railways, fast food chains, restaurants, hotels etc and also find their application in household uses. PAL has set up a world-class plant to produce AFCs and is the biggest supplier of AFCs to Railways, flight kitchens, airlines and Five Star hotels. Further, it has the best production process and moulds to produce the widest range of products. PAL’s manufacturing location attracted sales tax benefits for 15 years (five years left). Its products were exempted under certain notifications and subsequent to it, EOU duties were payable but at concessional rates, resulting in cost benefit. PAL is getting the tax benefit for 100% Export Oriented Unit U/s 10B of Income Tax Act, 1961."

"During Q4FY12, net profit surged by 82.4% to Rs25.9 crore (Rs14.2 crore) on 76.5% higher sales of Rs416.1 crore (Rs235.9 crore). OP and NP margin stood at 17.1% and 6.2% as against 18.5% and 6.0% respectively in Q4FY11. (YoY) During FY12, net profit advanced by 27.8% to Rs85.9 crore on 51.8% higher sales of Rs1369.3 crore. OP and NP margin stood at 17.7% and 6.3% Vs 17.9% and 7.4% respectively in FY11. FY12 EPS works out to Rs66.6 Vs Rs52.1 in FY11."

"PAL enjoys healthy position in the international market with the quality of the products best and comparable to any other products of World Class suppliers. The expansion now enables to capture the export market and the ever expanding retail market. Considering all these factors PAL is very much optimistic about times to come. India is the world’s eleventh largest packaging consumer, with a market size of US$550-billion that is expected to grow 18-20% (presently 15%). Evidently, it is projected that increased incomes will translate into higher industry growth. The large manufacturing base, long term supply contracts with leading clients, almost zero inward freight cost, zero excise, octroi and sales tax benefits, strong brand, huge replacement market, the potentially large addressable market coupled with major expansion give strong revenue & profitability visibility for PAL going forward. At the CMP of Rs300, the share of PAL is trading at a P/E of 3.5x on FY13E and 2.8x on FY14E. We reiterate BUY with a target price of Rs390 in the medium-to-long term," says Sunidhi Securities research report.

Buy stocks of Wipro; target of Rs 456

"Wipro is India's third largest software services exporter and also has interests in the hardware and consumer care and lighting businesses. The IT Services segment provides research and development services for hardware and software design to technology and telecommunication companies and software application development services to corporate enterprises. The BPO services segment provides services to global corporations."

"The India and Asia Pacific IT Services and Products segment focuses on addressing the IT and electronic commerce requirements of companies in India, Middle-East and Asia-Pacific regions. Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT Services Company globally. In the Asia Pacific and Middle East markets, Wipro provides IT solutions and services for global corporations. Wipro’s ADSs are listed on the New York Stock Exchange, and its equity shares are listed in India on the Stock Exchange, Mumbai and the National Stock Exchange, among others. Wipro Ltd provides comprehensive information technology (IT) solutions and services, including systems integration, information systems outsourcing package implementation, software application development and maintenance, and research and development services to corporations globally through its IT services, solutions and products division."

"Wipro Ltd has posted a consolidated result for the quarter ended March 31, 2012. During the quarter, the company has posted a net profit of Rs 14809.00 million for the quarter ended March 31, 2012 as compared from Rs 13754.00 million for the quarter ended March 31, 2011 rise of 7.67%. Net sales are surged by 18.48% to Rs. 98363.00 million from Rs.83024.00 million same quarters last year. Company posted earnings of Rs. 6.02 a share during the quarter, registering 7.47% increment over prior year period. During the quarter, Net Sales rose by 18.48% to Rs. 98363.00 million from Rs.83024.00 in the same the quarter last year and the Total Profit for quarter ended March 2012 was Rs.14809.00 million grew by 7.67% from Rs.13754.00 million compared to same quarter last year."

"At the current market price of Rs.404, the stock is trading at 15.49 x FY13E and 13.59 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs. 26.08 and Rs. 29.74 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 12% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 10.45 x for FY13E and 9.24 x for FY14E. Price to Book Value of the stock is expected to be at 2.84 x and 2.35 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 456 for medium to long term investment," says Firstcall Research report.

buy stocks of Elecon Eng; target of Rs 65

"Elecon Engineering Ltd (EEL) registered strong net sales growth of 24.8% YoY as net sales increased to Rs 442 cr on account of strong execution in MHE segment. Operating margins declined by 144 bps to 14.5% on account of change in sales mix and increased pricing pressure in the industry. Further, higher tax provisioning lead to PAT growth of 1.4% vs PBT growth of 17%, as PAT increased to Rs. 23.9 cr. Order backlog at the end of the Q4FY12 stands at Rs 1212 cr, while company registered orders worth Rs 259 cr during the quarter."

"EEL registered strong net sales growth of 25% on back of robust order execution in MHE segment. MHE division net sales increased by 48% to Rs. 295.5 cr. Growth was driven on back of projects reaching threshold and also low base effect. However, strong growth in MHE segment was partially dampened by decline in growth of Gear division. Gear division registered a decline in sales of -1.4% as sales decreased to Rs. 154.1 cr on account of slow down in industrial demand. Operating margins declined by 144 bps to 14.5% v/s 15.9% in Q4FY11. MHE segment which earns lower margins constituted 66% of sales mix in current quarter v/s 56% in Q4FY11. This coupled with higher input cost resulted in margin decline of 144 bps. For FY12, Benzler Radicon registered sales of Rs 255 cr. However, the company EBIDTA margins declined to 2% on account of one time cost related to moving of production facilities. For FY13E margins are expected to go back to 5%-7%."

"At CMP of 53 EEL is trading at P/E of 8.1x its FY12 and 6.5x its FY13E EPS. Considering attractive valuation, EEL’s product profile and strong order flows in recent past we recommend a BUY on the stock with a price target of Rs 65 (P/E of 8 x its FY13E)," says KRChoksey research report.

Buy stocks of Dish TV; target of Rs 67

"Dish TV reported another quarter of healthy performance. Net sales stood at Rs 525crs, growth of 21% YoY driven by increase in subscriber base. EBITDA for the quarter was Rs 144crs, robust growth of 60% over Q4FY11 as operating expenses including programming cost squeezed. The company posted loss of Rs 49cr as compared to loss of Rs 37cr in Q4FY11. Net profit had negative impact of forex loss of Rs 6.5cr. The company maintained its market leadership position. Ongoing digitization would boost the subscriber base and ARPU would increase as an outcome of HD services and increase in base pack. However increase subscriber acquisition cost due to incremental marketing and sales cost would drag operating margins. We are conscious on programming cost as contracts renewals are lined up which will have an adverse impact on operating cost."

"The company reported strong revenue growth in spite of soft economic environment and stiff competition in the market. Subscription revenue for Q4FY12 stood at Rs 434crs, a growth of 19% YoY. Dish TV added 0.41mn new subscribers taking total gross subscribers to 12.9mn and net subscribers to 9.6mn. ARPU for the year was Rs 153. We believe the company will maintain in its numero uno position in DTH market and will benefit from digitization. Also ARPU will show an upward trend on the back of HD services and increase in base packs. Dish TV reported increase in operating margins for Q4FY12 by 670bps YoY to 27.5%. However operating margins would be under pressure as subscriber acquisition cost (SAC) would increase considering competition from local cable operators to attract subscribers. Also the management has guided ~10% to ~12% increase in content cost as programming contracts are lined up for renewal which would be overhang for operating margins."

"Digitization would play a major role in terms of increasing total DTH base in the country. We expect Dish TV to benefit the most as the company is market leader and commands premium over its peers. At current price, the stock is trading at 10.8X EV/EBITDA to its FY13 earnings. We recommend Accumulate with a target price of Rs 67, by assigning 12x EV/EBITDA to its FY13 earnings," says KRChoksey research report.

Buy stocks of Bajaj Auto; target of Rs 1705

"Bajaj Auto, revenue up 11% YoY, led by 7% YoY volume growth Bajaj Auto reported top-line revenue at ` 46.5bn, up 11% YoY led by 7% YoY volume growth. The company sold ~900,000 motorcycles and ~120,000 three wheelers in 4QFY12. The company reported a 3% QoQ decline in its blended realisation per vehicle as a result of a lower 3W sales. Operating margins decline 120bps QoQ to 19.8% The company’s operating margins declined 120bps QoQ to 19.8%. This is 20bps lower than the guidance given by the company. This decline was purely led by lower realizations due to lower 3W sales. EBIDTA for the quarter was ` 9.2bn, up 7% YoY. Market share at 25.4% in motorcycle segment, down 140bps YoY Bajaj Auto lost market share to Hero Motocorp. Its share declined from 26.8% in FY11 to 25.4% in FY12. Its market share in the three wheeler segment improved marginally from 39.1% to 39.5%. PAT reported at ` 7.7bn in 4QFY12 The company reported its PAT at ‘7.7bn converting into an EPS of ` 26.7 for the quarter."

"3W sales continue to be under pressure. The company maintained its guidance for doing a combined volume of 5mn for FY13. We have estimated a 10% volume growth for two wheelers and 6% volume growth for three wheeler segment. This gives us a volume of 4.75mn in FY13. With the recent softening in commodity prices, we continue to expect margins at 20% for FY13. The stock has underperformed over the last three months on fears of a slowdown in the 3W segment. It currently trades at 12.0xFY14E. We maintain Accumulate," says Dolat Capital research report.