Buy stocks of TCS; target of Rs 1465

“TCS’s delivered strong numbers with a topline growth of 12% led by 5.3% volume growth and favourable Fx movement by 813bps. Operating profits grew by 11% QoQ as Fx tailwinds helped negate impact of wage hike/visa/pricing cut of 100bps during the quarter. PAT grew by 12% QoQ at ` 33bn well ahead of our estimate of ` 30bn on account of Fx gains and sustained efficiency in delivery.”

“TCS managed broad-based growth in constant currency terms across geographies/service lines/vertical lines, except for the business in India (down 14% QoQ). It is seeing strong momentum in next gen technologies such as Bigdata, Mobility and Analytics currently working on over 100+ clients for Mobility business. The company is also witnessing strong traction in host of its platform businesses SMB ion, HRO, F&A, Analytics and Life & Pension (expect sales of USD 500mn in FY13). The Company is confident on delivering 14%+ growth (NASSCOM estimates) but remains cautious as environment is not very conducive in European market. However; the current pipeline gives enough confidence to maintain sustained growth performance.”

“The company is witnessing higher demand for its service delivery model and better/ faster closure versus the previous quarter. Thus; we have turned incrementally positive on TCS in view of its strong business growth outlook based on robust growth expectancy for outsourcing and quicker decision making & rampups among its client portfolio. We maintain TCS as our Top Pick among Tier I IT space with a Target price of INR 1465 valued at 19x of its FY14E earnings (20% premium to Infy target multiple of 15x),” says Dolat Capital research report.

Buy stocks of Infosys; target of Rs 2630

“Infys’s June’12 qtr performance missed exp with co reporting a 1.1% QoQ decline in US$ terms at US$ 1,752 mn and margins declining by ~200 bps QoQ to 30.6% despite ~10% currency depreciation impacted adversely by ~3.7% QoQ decline in revenue productivity (3.1% QoQ in constant currency terms, with co attributing the decline to change in business mix with some sporadic pricing resets in BFSI) and ~US$ 15 mn of revenue reversal on account of a project cancellation. Profits at Rs 22.9 bn (-1.2% QoQ) missed expectations driven largely by op performance miss. Amongst geographies, North America led growth with Top 5/10 clients growing by 4%/2.6% QoQ, highest in 3 qtrs. A 2.8% QoQ vol growth in the qtr along with growth in top 5/10 clients in our view are the encouraging points in an otherwise below par performance by the company during the qtr and could be indicative of both (1) some pricing pressure in the sector (most evident in BFSI, with fin services op margins down by ~300 bps QoQ) as well as (2) co now becoming relatively more flexible on pricing/margins in the past ( albeit will have to wait for more confirmations on the front)”

“Infosys pared down it’s FY13 revenue outlook to ‘atleast 5% rev growth to US$ 7.34 bn’ V/s an 8-10% YoY growth outlook earlier (we expected the guidance to be revised to 6.5- 8.5% YoY growth) with cross currency moves contributing to ~150-200 bps cut in the guidance. The revised guidance implies a 3% CQGR through Q2-Q4FY13. Surprisingly, Infy has not provided any outlook for Sep’12 qtr citing macro uncertainty while remaining confident of it’s FY13 outlook, however continuous misses on quarterly performance in the recent past will limit the street from giving the benefit of doubt to the company.”

“We moderate our revenue estimates and now build in a 4.8%/10% US$ revenue estimates (V/s 8.8%/11% earlier), however lower currency resets limit any earnings cuts. Valuations at ~14x/13x FY13/14E P/E and 5%+ FCF yield will limit sharp downsides from current levels , however an pick up in operational performance (especially after a near continuous streak of disappointments) will need to preclude strong stock upsides. ACCUMULATE, TP cut to Rs 2,630 (V/s Rs 2,800 earlier),” says Emkay Global Financial Services research report.

Buy stocks of PFC; target of Rs 216

“For quarter ended March 2012, Power Finance Corporation reported 41% rise in Income from operations at Rs 3,683 cr compared to corresponding previous year period. Gross profit rose 42% to Rs 1,165 cr. Depreciation rose 17% to Rs 2 cr. PBT as a result was up 42% to Rs 1,164 cr. Effective tax rate stood at 30% compared to 26%. The final bottom line of the company increased 35% to Rs 818 cr. NII of the company rose 45% to Rs 1,229 cr in Q4FY'12 compared to Q4FY'11 and NIM of the company rose to 3.88% in Q4FY'12 from 3.55% in Q4FY'11. PFC disbursements are typically high in Q4 compared to other three quarters. The q-o-q disbursements increased 59%. The company plans loan disbursements of Rs. 43,000 cr in FY13 as against Rs.41000 cr in FY12. PFC has an adequate earning profile supported by its ability to borrow funds at competitive rates and low credit and intermediation costs. The company expects its spreads to improve in coming quarters as its assets are repriced every quarter while liabilities are repriced whenever RBI changes rates and RBI has signaled a full stop in the increase in rates.”

“On the back of strong loan sanctions, growth is expected to remain strong. Cost of raising new funds is expected to be low. We expect the company to post a CAGR of 22-23% in revenues over FY 2012-2014. At the CMP of 184, we estimate the target of Rs.216 (8x FY13 EPS). The company is exempted by the RBI in complying with prudential guidelines & provisioning norms laid down for NBFC. If the same were to be enforced, the valuation of the company would be adversely impacted,” says Maximus Securities research report.

Buy stocks of IndusInd Bank; target of Rs 371

“Indusind Bank (IIB) reiterated its objective of achieving scale along with profitability by posting above industry growth in credit of 31% and alike growth for net profit. The growth in profit was led by 24% rise in NII and striking 48% other income growth. With no assets being restructured during the quarter, it signaled towards the good quality of loan book. The credit costs however increased to 12 bps as provisions were made for one medium sized gem & jewellery account which had turned NPA, the management asserted that recovery was possible in 3-6 months.”

“The strong growth in credit was backed by 48% YoY growth in its higher yielding fixed Consumer Finance Division (CFD) loan book which accounted for 50% of total advances. At present this book is funded by CASA, CFD refinance portfolio and retail fixed deposits. The management maintains its longer term outlook of funding this book entirely through CASA. We expect 26% growth in IIB’s loan portfolio for FY13E. The strong growth in credit was backed by 48% YoY growth in its higher yielding fixed Consumer Finance Division (CFD) loan book which accounted for 50% of total advances. At present this book is funded by CASA, CFD refinance portfolio and retail fixed deposits. The management maintains its longer term outlook of funding this book entirely through CASA. We expect 26% growth in IIB’s loan portfolio for FY13E.”

“The bank’s unrelenting show of impressive performance despite challenging times, reflects the bank’s strong and dynamic business model. Our revised TP stands at Rs. 371 valuing IIB at 2.4x its FY14E BV, implying an upside of 7% from current levels. Thus rating it Accumulate,” says SKP Securities research report.

Buy stocks of Zee Entertainment at lower levels

"From a monthly perspective after long time Zee Entertainment Enterprises has shown some breakout on the momentum indicators. I think it is pulling back, which gives us an opportunity to buy maybe from Rs 139 all the way to Rs 135-134 and keep a stop below that. I do know that Rs 151 is the major hurdle for this stock but I think long-term it is setting up for something better."

The company's trailing 12-month (TTM) EPS was at Rs 5.92 per share. (Mar, 2012). The stock's price-to-earnings (P/E) ratio was 23.78. The latest book value of the company is Rs 31.39 per share. At current value, the price-to-book value of the company was 4.48. The dividend yield of the company was 1.07%.

Buy stocks of Reliance Capital, Karnataka Bank on dip

"Reliance Capital is as good as Reliance Communication. The chart is suggesting that the bull market in Reliance Capital is starting. The bear market is over and trade should be taken only on the long side. Today Reliance Capital is a worth buying stock on dips."

He further added, "Yesterday Karnataka Bank had a big move and that has taken it above a small trading range and above a significant resistance level. For a position trader it's probably become a buying opportunity, wait patiently for any kind of corrections, they are inevitable but it is worth looking into. For a day trader - if somebody still wants to go then a target of Rs 105 is possible on the upside but buy only on a dip."

Buy stocks of BGR Energy at current level.

"BGR Energy has made a bullish head and shoulder pattern. The chart is slightly clumsy. It's rather volatile. It goes up and suddenly moves down on alternate days. But broadly the trend is up. Yesterday's big gains should be built upon. It's again on the verge of a breakout."

He further added, "Even if the Nifty were to correct I suspect that there will be a lot many stocks, which can be traded on the upside while the correction is going on. So BGR is going to be one of them. It's a buying opportunity today and certainly for position traders."

" Gujarat Fluorochemicals is a disappointing stock. It is in the Futures & Option (F&O) segment so one can sell it using futures. It was a darling of yesterday but since then it's a complete disappointment. It's fallen from Rs 550 to more than Rs 400, little above Rs 400 and it is threatening to breakdown from small support that it held on to and if that happens it is going to Rs 395 as a short-term move and probably much lower. There is something going on in the company and the market does not like it. It's giving bearish signals consistently."