FUNDAMENTAL CALL
Buy Infosys Technologies Ltd For Target Rs.4191.00 CMP: Rs.3935
Buy Larsen & Toubro Ltd For Target Rs.1721.00 CMP: Rs.1446
Buy Maruti Suzuki Ltd For Target Rs.3404.00 CMP: Rs.2979
Buy Grasim Industries Ltd For Target Rs.4163.00 CMP: Rs.3408
Buy Kansai Nerolac Paints Ltd For Target Rs.2250.00 CMP: Rs.1858
Buy Engineers India Ltd For Target Rs.315.00 CMP: Rs.238
Buy Allcargo Logistics Ltd For Target Rs.295.00 CMP: Rs.243
Buy Geometric Ltd For Target Rs.167.00 CMP: Rs.138
Buy Zee Entertainment Enterprises Ltd For Target Rs.332.00 CMP: Rs.319
TECHNICAL CALL
Buy Cipla Ltd
Buy Hindustan Petroleum Corporation Ltd
Buy Infosys Technology Ltd
Buy Larsen & Toubro Ltd
Buy Reliance Communication Ltd
FUNDAMENTAL STOCK PICKS
* Infosys Technologies Ltd
Buy Infosys Technologies Ltd For Target Rs.4191.00 CMP: Rs.3935
We have been positive on the long-term demand prospects for quite some time. With the developed economies (especially US) stabilizing, we do expect the demand scenario to improve over the next few quarters.
The margins for Infosys seem to be improving ahead of our expectations.
The new strategy should allow Infosys to improve growth rates over the long term with sustained margins.
* Larsen & Toubro Ltd
Buy Larsen & Toubro Ltd For Target Rs.1721.00 CMP: Rs.1446
Diversified play on the Indian infrastructure and Industrial sector.
Order backlog of Rs. 1.65trn remains strong providing visibility of 34 months of trailing four quarter revenue.
The company has given guidance of 20% growth in order intake in FY14. We expect stock to respond favourably to any reforms moves to address the issues that have plagued the power sector.
* Maruti Suzuki Ltd
Buy Maruti Suzuki Ltd For Target Rs.3404.00 CMP: Rs.2979
In FY15, we expect the company to report volume growth led by new products and expected improved demand scenario. We expect MSIL to launch 2-3 new models in FY15.
Management expects double digit volume growth for the company in FY15 in the domestic market. In exports, management guided for flat volume growth in FY15.
We expect MSIL's EBITDA margin to improve in FY15 and FY16. MSIL has lowered its import content from peak of around 25-26% (2-3 years back) to 16% by end FY14. Company plans to further reduce it to 12-13% over the course of next few years.
* Grasim Industries Ltd
Buy Grasim Industries Ltd For Target Rs.4163.00 CMP: Rs.3408
VSF division performance remained weak till Q1FY15 but demand environment is improving slightly. Prices have remained stable during past two months.
Capacity expansion in VSF and chemical division to translate into increased volumes during FY15 and FY16.
Cement division volumes are also likely to increase on demand improvement, capacity expansion, higher dispatch from JCCL plants.
* Kansai Nerolac Paints Ltd
Buy Kansai Nerolac Paints Ltd For Target Rs.2250.00 CMP: Rs.1858
KNPL is the market leader in the Industrial Paint Segment with 42% market share, with automotive segment contributing 75% of the industrial segment revenues.
We expect revival in auto sales and capex cycle from here We estimate margins of the company to improve over FY14 to FY16E by 70 bps. The company has no major near term capex.
* Engineers India Ltd
Buy Engineers India Ltd For Target Rs.315.00 CMP: Rs.238
Engineers India enjoys a healthy market share in the Hydrocarbon consultancy segment. It enjoys prolific relationship with few of the major oil & gas companies like HPCL, BPCL, ONGC and IOC.
Company is well poised to benefit from recovery in the infrastructure spending in the hydrocarbon sector.
We believe that in future, company shall inevitably benefit from MoPNG huge target of nearly Rs 1.2 trillion envisaged for various projects in XII five year plan.
Company has been observing pick up in order inflows/revenue booking in consultancy business space which enjoys healthy margins.
* Allcargo Logistics Ltd
Buy Allcargo Logistics Ltd For Target Rs.295.00 CMP: Rs.243
Allcargo has a strong presence in the MTO business through wide network of ECU Line.
It also has a strong hold on domestic MTO business and continues to perform strongly in the MTO segment despite sluggish container shipping market
We estimate the MTO segment to grow at ~24% in FY15 and ~7% in FYY16 Strong relationships will help the company to report stable volumes in the CFS segment in FY15E and FY16E.at around 200,000 TEUs per annum
* Geometric Ltd
Buy Geometric Ltd For Target Rs.167.00 CMP: Rs.138
The scale-down in the large account is complete and should not impact FY15 revenues.
Also, the management has undertaken several restructuring initiatives to improve growth, bring in predictability as well as sustain margins.
These initiatives are expected to lead to improved revenue growth over the next few quarters. The order booking over past three quarters and the strong pipe-line make us optimistic on future growth prospects.
* Zee Entertainment Enterprises Ltd
Buy Zee Entertainment Enterprises Ltd For Target Rs.332.00 CMP: Rs.319
Amongst most exposed broadcasting plays to ride DAS: Zee Entertainment has over 30 channels that bring strong bargaining power to the company. As such, the company is well-set to benefit from the roll-out of DAS over the next few years.
New channels to improve company’s positioning, augur well for long-term valuations
Strong balance sheet enables the company to react strongly to competitive strain: The entertainment space could see significant competitive strain, and we believe that broadcasters with strong balance sheets are better positioned.
Ratings strong, Zee well – positioned to benefit from uptick in advertising
TECHNICAL STOCK PICKS
* Cipla Ltd
Buy Cipla Ltd
The stock is out of running rising triangle, which is the most bullish pattern for any stock. Since mid of 2006 the stock was into given formation between the range of 150 and 450 but in the year 2014 after almost a eight years the stock has broken the pattern on upward side and strong buying has emerged. We are of the view that it should quote at 750 to 800 on the minimum side that too in a short time frame (3-6 months) but in the long run we are expecting stock to double from current levels (of 600) around 1200. Buy at current and add more between 530/520 with a stop loss at 490 on a closing basis.
* Hindustan Petroleum Corporation Ltd
Buy Hindustan Petroleum Corporation Ltd
Since 2003 to till date the stock is range between 160 and 540. Current up move that has started since August 2013 is encouraging and it is in impulse/trending mode. We are of the view that in the current run up it would not be difficult for it to break 540, which is a consolidation of last 11 years. Such type of formations works well and current news flow is extremely positive for it. Technically, we are expecting 660 as a next major hurdle for it but finally it should quote at 900 in next 12 to 18 months of time. Buy at current levels 500/490 add more at 420/430 with a final stop loss at 380 on a closing basis.
* Infosys Technology Ltd
Buy Infosys Technology Ltd
It was highly unexpected that the stock will cross its life time highest level 3850 in a time span of five months that too in a highly competitive environment. Based on time and price recovery we are of the view that it is heading for the target of 5000 in next 12 to 15 months of time but later on it may even hit the level of 7500 approximately in next 3 years of time. Buy between 3900/3850 add more between 3780/3760 with a stop loss at 3700 on a closing basis.
* Larsen & Toubro Ltd
Buy Larsen & Toubro Ltd
After the decisive break out at 1380/1400 it jumped to 1775 in the month of June 2014. However, it failed to sustain those gains on the back of weak IIP data and delayed in rate cut announcement from the RBI. We are of the view that it is out of continuation triangle after crossing 1380 and currently it is in throw back mode. At present the risk reward ratio is extremely favorable for investors as well as for contra traders. Buy between 1350/1400 add more between 1250/1230 with a stop loss at 1200 for the target 1660 and 1770. Once the stock starts sustaining above 1780 it should move to 2200 or 2500 in the long run.
* Reliance Communication Ltd
Buy Reliance Communication Ltd
The stock is range bound since May 2009 between the range of 670 and 1150. Technically, the level of 900/870 should act as a major support for it, which is away by just 5% to 6%. The risk reward ratio is favorable for long term investors as it available at 930/920. Buy between 930/920 and add more between 870/850 with a stop loss at 845 on a closing basis for the target 1100 and 1150. In the run it should quote at 1400 once it will break the level of 1150. Break out should be volume based.
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