Buy NRB Bearings; target of Rs 165: ICICIdirect

NRB Bearings (NRB) is the leader in the needle roller bearings segment in India with ~70% market share. With customised offerings and a pure play on the mobility segment, NRB enjoys a sticky clientele across all leading OEMs coupled with a strong exports segment (forming ~23% of FY14 topline) that has grown at 25.7% CAGR in FY09-14. With automotive volumes showing early signs of recovery coupled with a strong launch pipeline and product refreshes ahead, we expect the consolidated topline and earnings to grow at 17.4% and 39.3% CAGR, respectively, in FY14-17E. We are initiating coverage on the stock with a BUY recommendation and an SoTP target price of Rs 165/share.

Leader in needle bearing segment NRB is the leader in the needle bearing segment in India with ~70% market share. Needle roller bearings constituted ~55% of NRB’s topline in FY14. A needle roller bearing, as a customised product, requires NRB to work with OEMs from the conceptualisation stage. This enables it to build sticky clientele relationships with almost all major OEM players.

 Apart from needle bearings, cylindrical bearings are the other key product with needle and cylindrical bearings together forming ~68% of the topline. Early signs of auto revival + strong launch pipeline augur well for NRB For YTDFY15, auto volumes have recovered with 11.6% growth (mainly driven by two-wheeler segment growth, which was up 13.7% YoY). With the auto industry finally showing signs of a recovery after nearly two years of a demand slump coupled with a strong launch pipeline and product refreshes, we expect bearings demand from the OEM segment to pick up significantly. Therefore, net revenues from the OEM segment are expected to grow at 15% CAGR during FY14-17E to Rs 560 crore. De-risked geographical presence through strong exports… 

To expand its geographical footprints and foray into newer platforms, NRB has forayed into exports wherein it caters to global players such as Daimler, Renault, Volvo and Getrag. NRB’s exports, which grew at 25.7% CAGR over FY09-14, have also provided a natural hedge for its import of raw materials. Exports, which formed ~7.6% of the topline in FY10, now constitute ~23.3% of revenues in FY14. We expect NRB’s export revenues to grow at 23.3% CAGR in FY14-17E to Rs 260 crore in FY17E. Strong earnings growth to boost valuations… "Given NRB’s leadership position in the needle roller bearings space with a pure play in the mobility segment recovery and strong consolidated earnings growth at 39.3% CAGR in FY14-17E, we initiate coverage on NRB with a BUY rating. We ascribe a multiple of 18x (at ~30% discount to SKF) on the FY17E earnings to arrive at a valuation of Rs 165/share", says ICICIdirect.com research report.

Buy Tata Steel for long term, says Neeraj Deewan

Neeraj Deewan, Quantum Securities told CNBC-TV18, “I would not really buy metals right now because I need to get lot more clarity regarding the demand, raw material prices and raw material availability. So, it can be a trading bet once they fall like  Tata Steel  fell a lot.”

 “If someone has a very long term perspective may be he can start buying the stocks like Tata Steel which is still very close to the 52-week low. However in 6 months to one year there are a lot of other sectors which can outperform. So, this will come quite low under the sector specific investment that we are recommending,” Deewan added.

Buy ITC, Godfrey Phillips valuations attractive: Quantum

Neeraj Deewan, Quantum Securities told CNBC-TV18, “There is some buying in  Hindustan Unilever (HUL) which is happening because of this flight to safety. However I will not recommend people to go for FMCG stocks because they are not cheap.” 

“Definitely one is stock specific, one might get some opportunity here and there where the valuations are still attractive but as a pack whether it is HUL or whether it is  Godrej Consumer or others, I think they are very expensive. However,  ITC  I will put in different basket. We have buy rating, we have a coverage on a stock  Godfrey Phillips is valuationwise attractive. So, may be certain pockets will be there where valuation is there but generalised if you see FMCG I think valuations are very rich right now,” he said.

Buy Infosys; target of Rs 2400: ICICI

Rahul Mohindar, viratechindia.com told CNBC-TV18, “ Hindustan Unilever  (HUL) can do it more. But would I buy it at this point or recommend buying it at this point? I think the risk to reward ratio doesn’t justify it. We have seen quite a large run up and I think at this point in time may be 3-4 percent more is there on the stock before a nice big correction.” 

“So, I would refrain from buying in and probably use the next bout of a run up, the next 3-5 percent to take off some profits,” he added.

Accumulate Infosys; target of Rs 2285: Dolat Capital

Volume grew by 4.2% QoQ, best in last 12 quarters. The company expects strong volume momentum to continue despite the mixed view on client’s budgets trends. Company has maintained guidance of 7-9% $ revenue growth at Q2 exchange rates, implying -1% to 6% QoQ growth for Q4, further adding suspense on trend forward. It has added 59 new clients (gross) in the quarter and expects trends to better both on discretionary, non-discretionary and digital across verticals except for Telecom, select Energy/manufacturing clients.

 No concern on Productivity going forward despite the weak realization trend in recent past as it is witnessing uptick in pockets and would spread across verticals. Not expecting any specific concerns in any of the geography in particular. "We believe CEO Dr Sikka has helped in loads of confidence restoration through its commentary on its positive interactions with all stakeholders, 100% variable payout for entire workforce in Q3, sustained deal traction and endeavor to regain its bellwether tag in the industry through leading new technology and strong financial outperformance.

We believe the strong volume growth (4.2% QQ), better commentary outlook, broad basing of growth and improved OPM profile at about 26% would help Infosys in its efforts on confidence restoration and would mean sustained marketperformance as long as it keep on delivering in line with its aspiration on improved volume (15%+) and profitability (26%+).

 We have broadly maintained our estimates with a Revenue/earnings CAGR of 13%/14% over FY15-17E. We maintain our rating ofMarket-performer on the stock with a TP of Rs 2285 valued at 16x on FY17E earnings (inline with current discounting). Accumulate the stock for target price of Rs 2285", says Dolat Capital research report.

Buy Jaiprakash Associates: Manas Jaiswal

Manas Jaiswal of manasjaiswal.com told CNBC-TV18, " Jaiprakash Associates   is making higher tops and higher bottoms from the level of Rs 23. The stock can test 50-day moving average which is placed at Rs 29. 

So even at current level one can buy JP Associates with a stoploss at Rs 25.75." On Thursday, Jaiprakash Associates closed at Rs 26.75, up Rs 1.30, or 5.11 percent. It has touched an intraday high of Rs 27.10 and an intraday low of Rs 25.85.

Buy Motherson Sumi; target of Rs 590: ICICIdirect.com

Technical Outlook The share price of Motherson Sumi Systems has registered a breakout from the bullish Cup and Handle pattern on Wednesday signalling the end of the secondary consolidation and resumption of the next up leg, thereby offering a fresh entry opportunity to ride the ongoing uptrend from a medium-term perspective. 

The earlier share price retraced its three week decline (Rs 450-394) in just a week indicating a positive price structure as rallies are stronger and faster whereas corrections are shallow and time consuming. The 21 week EMA has historically acted as a strong support in the stock during the secondary corrective price action as can be seen in the adjacent chart and is currently placed at Rs 404. The stock has seen a strong pullback from the support level and has rallied from strength to strength, thereafter. 

It has consistently made higher peaks and bottoms, which indicate a strong appetite to own the stock among market participants. Volume behaviour also supports the overall bullish stance as rallies throughout the year have been on the back of volumes double the 50-week average of 45 lakh shares per week while the secondary correction have seen relatively low volume participation. Considering the overall positive price structure, we believe the stock offers a good reward/risk set-up to ride the next up move. We expect the stock to head towards Rs 590 in the medium-term being the 123.6% extension of the previous major rally (Rs 257 to Rs 448) as measured from the October 2014 low of Rs 352. 

Fundamental Outlook Motherson Sumi (MSL) has been increasing its presence across multiple product segments and customers either by forming joint ventures for different product lines or by cross-selling product or technologies. The company has been able to acquire companies available at distressed valuations with assured business from OEMs. The standalone business has also benefited from this and MSSL has grown faster than the domestic auto industry by increasing content per car as its association with the overseas subsidiaries continues to help garner more business in India from global OEMs. 

With MSL’s competence on turning around businesses evident from the success of SMR and SMP, we believe the management’s strong focus on RoCE augurs well for the performance in the wake of strong growth potential. MSL’s performance has sustained (PAT CAGR has driven up valuations in sync). Our outlook on the business remains positive with strong growth likely from both organic and inorganic sources, which are likely to ensure that multiples premium remains vis-à-vis peers. 

We value the company on SOTP valuation. However, on an overall basis, it remains attractive at ~16x PE, 7x EV/EBITDA FY17E earnings. 

Strategy: "Buy Motherson Sumi Systems in the range of Rs 448–456 for a target price of Rs 590.00 with a stop loss below Rs 395.00 on a closing basis", says ICICIdirect.com research report.

Book profits in Jet Airways: Kunal Saraogi

Kunal Saraogi of Equityrush told CNBC-TV18, "The risk reward clearly does not favour a buy in  Jet Airways  . I think this is the time to book profits in Jet Airways. 

We have seen a vertical move and most of the positives are already in the price. It has got a major resistance at Rs 450, so I don’t expect the stock to outperform from here on. 

So, given the risk, given its volatility, it is best to take profits and stay away from the stock for a little while." At 14:23 hrs Jet Airways was quoting at Rs 446, up Rs 8.90, or 2.04 percent. It has touched a 52-week high of Rs 458.90.

Buy Asian Paints, Kotak Bank, UltraTech Cement: Sukhani

Sudarshan Sukhani of s2analytics.com told CNBC-TV18, " Asian Paints  is rallying after a minor correction and a trading range. It was in our buy list yesterday in the morning and again in the afternoon.

It is a very nice stock to own. We want to buy it not only as a BTST call but also to hold it for a few days. If the Nifty is crossing 8300, Asian Paints should be a big winner." " Kotak Mahindra Bank  is an outperformer. 

The charts say it is making new highs and new highs for a bluechip should be a buying opportunity," he said. " UltraTech Cement  is the best of the cement lot. The stock was in a large trading range. It is breaking out today. 

it is a trading call but it is also a stock where you want to build a position if you want to make a small investment somewhere in the market today."

Buy Gujarat Pipavav Port, OnMobile Global: Pankaj Jain

Pankaj Jain of Sunteck Wealthmax Capital told CNBC-TV18, "One can buy Gujarat Pipavav Port   with a stoploss of Rs 223 and a target of Rs 234." "One can also buy OnMobile Global   with a target of Rs 84 and a stoploss of Rs 78," he said.

Buy ICICI Bank, Kotak Bank: Sharmila Joshi

Sharmila Joshi of sharmilajoshi.com told CNBC-TV18, "As far as  ICICI Bank   is concerned, 
one should buy it. Either buy it or  Kotak Mahindra Bank . It is an ideal time to get into a private bank because a lot of things still will play out in the next couple of years once the interest rate cycle turns for banking as a sector."

 " Suzlon Energy  has been in the news because they want to sell off some of their holdings and bring down their debt levels but overall if you track the way the company has been performing over the last couple of years, I would not put my money in Suzlon Energy," he said. 

" Elder Pharma is a decent stock within the pharmaceutical space and pharmaceutical space again is a space that I would be positive on but very honestly may be Elder Pharma would not be the stock that I would buy within the midcap, I would look at a stock may be like Biocon  at current level or among the larger players the stocks like Lupin  or Sun Pharma ."