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Wednesday, June 27, 2007

Stocks you can pick this week


Unity Infra
CMP: Rs 521.20
Target price: Rs 609

Emkay Share and Stock Brokers has recommended a ‘buy’ on Unity InfraProjects with a price target of Rs 609. “Given the robust growth in infrastructure spending, significant experience & strong track record of the company in executing turnkey and design-build projects resulting in higher EBITDA margins, we feel Unity InfraProjects is well positioned to bid and win more complex and higher value-added projects,” the Emkay note to clients said. “Company’s focus on entering the BOT projects and real estate space as a contract builder holds good opportunity for the company,” the note added.

Hotel Leela
CMP: Rs 52.25
Target price: Rs 67

Citigroup Global Markets has maintained its ‘sell’ recommendation on Hotel Leela Venture with a price target of Rs 67. “Leela’s high dependence on the Bangalore market (where average room rate growth is peaking), limited room inventory and lack of presence in key growth markets — Hyderabad, Pune, Chennai and Delhi — remain our concerns in terms of growth prospects for the next two years,” the Citigroup note to clients said. “While growth momentum is strong, with stock trading at 15 times FY08 (estimated earnings), near-term growth upside appears priced in. The stretched valuation does not leave much margin for error from potential execution delays for upcoming hotel projects, in our view,” the note added.

Indusind bank
CMP: Rs 48.70
Target price: NA

First Global has initiated coverage on IndusInd Bank with an ‘outperform’ rating, citing a turnaround in the bank’s performance as the key trigger. “We think that IndusInd is gradually witnessing a transformation and the change would be far more visible in the coming quarters,” the First Global note to clients said. “In the worst-case scenario, if IndusInd is unable to address its key concerns of NPAs and low-NIM (net interest margin), then, to our mind, it would become an ideal candidate for a takeover post-2009, once the Indian banking sector is opened to foreign players,” the note added. According to the brokerage, at a price to book value of 1.1 times estimated FY09 earnings, the stock is cheap, considering that the best bank in the industry is available at 3.8 times,” the note added.

IDBI
CMP: 110.05
Target price: Rs 129

KR Choksey Shares & Securities has rated IDBI as a ‘buy’ with a price target of Rs 129. “The bank has shown paradigm shift in its business model; moving from development financial institution to universal bank providing a whole gamut of financial products,” the KRC note to clients said. “The bank has substantial amount of investments in listed and unlisted equities of various companies. Market value of few of these investments (which includes Sidbi, NSE, ARCIL, IDFC and IFCI and subsidiaries of IDBI) stands at Rs 3772.8 crore, amounting to Rs 52.2 per share of IDBI. Interestingly, value of the bank will increase manifold once the bank starts booking profits from these investments,” the note added.

Nucleus Software
CMP: Rs 990.10
Target price: NA

Edelweiss Capital has initiated coverage on Nucleus Software with an ‘accumulate’ rating. “With 250-plus product implementations, for its flagship product — FinnOne™ - Nucleus has credibly positioned itself as a retail banking packaged software player,” the Edelweiss note to clients said. “We expect Nucleus’ revenues and profits to grow at 42% and 41% (compounded annually), respectively, between FY07 and FY09 (estimated). Given Nucleus’ strong forte in the BFSI (banking, financial services, insurance) vertical, high pedigree management, strong clientele, and excellent return ratios, its prospects appear bright,” the note added.