Stock Views on Bajaj Auto, Power Grid, Welspun Gujarat

Bonanza on Welspun Gujarat - Target Rs 240


Bonanza has recommneded a buy rating on Welspun Gujarat with target price of Rs 240 in its research report.

"The quarter started with the order book of approximately Rs 7500 crore and added Rs 1200 crore. The company gets orders from both domestic and overseas buyer. The company’s five year CAGR of consolidated revenue is 53.3% and profit is 58.3%. The company’s operating margin will extensively go up in FY 10 due to fall in price of raw materials as well as selling price. The company is trading at the one year Forward PE of 7.4X. The new investors can 'BUY' at CMP of Rs 201 with the target of Rs 240, " says Bonanza's report.

Hem Securities on Power Grid - Target Rs 144

Hem Securities has initiated a buy rating on Power Grid Corporation of India with a target price of Rs 144 in its research report.

"The company posted financial figures for the quarter ended March 2009 more than expectations. The net sales for the company gone up by 44.30% to Rs 22498.90 million for the Q4FY09 as against the net sales of Rs 15591.80 million for the Q4FY08. The stock at the current market price of Rs 110.10 will trade 27.38 times to its earnings of Rs 4.02 and 3.16 times to its book value of Rs 34.74 and is expected to provide huge upside potential in medium to long – term. We initiate a ‘BUY’ signal on the stock at the current levels with a target of Rs 144 in the medium term investment horizon (5- 6 months) with an appreciation of about 30%," says Hem's research report.


Hem Securities on Bajaj Auto - Target Rs 1430

Hem Securities has initiated a buy rating on Bajaj Auto with a price target of Rs 1430 in its report.

"Bajaj Auto limited is one of the largest two wheeler manufacturing company in India. The company posted excellent financial figures for the quarter ended June 2009. The net sales for the company remain flat at Rs 23384.70 million for the Q1FY10 as against the net sales of Rs 23107.60 million for the Q1FY09. The company posted the operating profits of Rs 4314.00 million for the Q1FY10 as against the operating profits of Rs 2667.80 million for the Q1FY09 with the growth rate of 61.71%. The company plans six new launches in 2009 and on back of these launches the company is planning to almost double its sales in India by the second half of 2009-10. We initiate a ‘BUY’ signal on the stock at the current levels with a target of Rs 1430 in the medium term investment horizon (4- 5 months) with an appreciation of about 24%,“ says Hem Securities' report.

Stock Views on Allahabad Bank, Wipro, ICICI Bank

Maximus Securities on Allahabad Bank - Target Rs 105

"At the current price of Rs 75.50 the scrip discounts its estimated EPS of FY10 by 3.08x. The scrip is currently trading at a PE ratio of 4.39x and P/BV ratio of 0.68x which is at a discount of 45% and 10% to the industry average respectively. With the pick up in credit demand particularly in infrastructure and home loan segment, the business of the Bank is expected to grow at 20-21% in FY10. However NIM is likely to be affected with reduced lending rates which may affect the profitability of the Bank in the coming year. But the Banks target of 40% CASA ratio will help to maintain NIM at 2.75% at the end of FY10. With restructured accounts in the balance sheet, rise in NPAs remains a concern. However the fact that the Bank is adequately capitalized, provides cushion in case NPAs rise. We recommend a “BUY” on Allahabad Bank with a target price of Rs 105 and an investment horizon of one year," says Maximus Securities' report.

Sharekhan on ICICI Bank - Target Rs 781

"ICICI Bank’s loan book growth has decelerated sharply in the last three years with FY2009 marking the first instance of contraction in the loan book. The root cause of this decelerating trend in the loan book growth is the slowdown in the retail segment. The slowdown in the retail segment is partly due to the weakening demand and partly due to the management’s objective of re-balancing its loan portfolio following an uptick in delinquencies. At the current market price of Rs 733, the stock trades at 17x its FY2011E earnings per share (EPS) and 1.5x its FY2011E book value (BV). While we are maintaining our earnings estimates, we are revising our price target to Rs 781 based on our FY2011 estimates. We maintain our Hold recommendation on the stock,"

Bonanza on Wipro - Target Rs 500

"Wipro is the second largest IT service vendor in the Indian Market behind IBM. We expect the company to leverage its strong presence in India and continue to bag multiple contracts in the coming months, which would aid Wipro in reporting incremental revenues in the coming years. The company has bagged Six and a Half year contract worth Rs 1182 crore from Employee State Insurance Corporation. Order worth Rs 200 crore from LIC. Company bagged order from Unitech wireless executable over a period of Nine years for an undisclosed sum. Company has reported a growth of more than 28% in its topline for FY09."

"Going ahead, with orders form Indian Sector improving and Clients in US and Europe also seeking a reduction in cost and opting for out sourcing Company’s topline is expected to improve in the coming years and expansion of profit margins can also not be ruled out. At current market price the stock is trading at an earning multiple of 13.89 x for TTM EPS of 26.64. We recommend investor to gradually accumulate the scrip on dips near Rs 395 with a target of Rs 500 in the medium term," says Bonanza's report.

Bonanza Portfolio Views on Midcap Power Stocks - CESC, JP Hydro

CESC

The company has an integrated utility business model with a presence in generation and distribution. It has installed capacity of 975 MW, has four generating units and caters to 2.1mn consumers in Kolkata. It is working on a 250-MW Budge Budge expansion. It is also getting into mining business and coal mines have been allocated to them. Spencer Retail is one of the subsidiaries of the company.

JAIPRAKASH HYDRO POWER

Jaiprakash Hydro-Power Ltd (JHPL), a part of the Jaypee Group, owns and operates the 300 MW Baspa-II Hydroelectric project in HP. It is also setting up joint venture for transmission of power. The current policy of the government is to enhance the share of hydropower in the current power generation basket. The EPS is Rs 3.20. The stock is attractively valued and is currently available below its issue price.