NSE/BSE STOCK MARKET TIPS

CLSA Asia Pacific Markets puts buy on Cairn India
1 Nov, 2008.

CLSA Asia Pacific Markets has rated Cairn a “buy” citing attractive valuations and expectations of a rebound in crude oil prices. “Cairn is discounting $35/barrel nominal Brent to perpetuity on our DCF (discounted cash flow) valuation models.

On a nearer term, the stock reacts more to spot crude but is now at $40/barrel on this regression,” the French brokerage said in a client note. “We do not see $30-40/barrel as sustainable despite a worsening global oil demand scenario given tight supply and rising costs of production; we model in $70-80/bbl Brent over 2009-10 ,” it added.

DLF buys back 2.5 lakh shares on opening of offer
19 Oct, 2008.

NEW DELHI: Country's largest real estate firm DLF bought about 2.5 lakh shares worth about Rs 7.6 crore on the first day on Friday from the open
market under the buyback offer.

The company purchased 2.5 lakh shares at an average price of Rs 304.19 per share, DLF said in a communique to the National Stock Exchange.

The company has bought back about 1.5 lakh shares from the NSE, while it purchased one lakh shares from the BSE, it added.

DLF today kicked off its Rs 1,100 crore offer to buyback 2.2 crore shares at a face value of Rs 2 each from the open market.

The company has appointed JM Financial Services and DSP Merrill Lynch as its brokers for placing orders on the bourses.
However, the offer failed to boost the company's share prices as the scrip fell by 10.34 per cent to close at Rs 291.30. It had closed at Rs 324.90 per share yesterday.

In July, the company had announced its plan to buy back shares from open market at a price not exceeding Rs 600 a share. Post-buy back, the shareholding of the promoters would increase from 88.16 per cent to 89.32 per cent.

The offer would end on July 9 next year. However, the board in its absolute discretion may decide to close the buy back at an earlier date, if the minimum offer shares have been purchased under the buy back, even if the maximum offer size has not been reached or the maximum offer shares have not been bought back.

Analysts' picks: NTPC
4 Oct, 2008.

CMP: Rs 171.85
Target price: Rs 208

Goldman Sachs Research has initiated coverage on the stock with a ‘buy’ rating, saying NTPC’s business model entails a high degree of earnings visibility with core business consistently yielding 20% plus return on equity (RoE).

“NTPC scores well as a defensive growth option. It has the lowest risk to funding amongst its peers, competitive cost of generation, RBI guarantee for payment realisation from its customers (financially-constrained SEBs) up to FY2016 and inexpensive valuations,” said Goldman Sachs Research in a note to its clients.

The firm expects the company’s net profit to grow at a compounded annual rate of 7.3% between FY2008 and FY2011E (estimated) on the back of a 30% growth in wholly-owned commercial generation capacity over this period.

“Net income growth would rise progressively over the next three years, as we expect around 45% of the 7,760MW of commercial capacity addition over this period only in FY2011E,” the note said.

Vishal Info: Acquisition boost

The stock gained 12.4 per cent from Rs 314.55 to Rs 353.65 in a falling market last week after the company announced that it was considering acquisitions in the UK and Europe. The company has announced a board meeting on October 1 to consider raising funds through external commercial borrowings and global depository receipts (GDRs).

The combined trading volume on the counter almost doubled, with 11 million equity shares changing the hands last week compared with 6 million shares traded in the week earlier. The stock, which got listed in August this year, has appreciated by 136 per cent from its issue price of Rs 150 on BSE.

The company covers almost all segments in IT-enabled services sector other than the voice call centre. Currently, the company’s revenues are generated from projects and services and e-publishing, including data digitisation.

Goldman Sacs retains 'buy' on Axis Bank
17 Sep, 2008.

Axis Bank
CMP: Rs 696.55
TARGET PRICE: Rs 1,010

Goldman Sacs has retained its ‘buy’ rating on Axis Bank, expecting the bank’s earnings per share of grow at a compounded annual rate of 33% between FY07 and FY10. The growth, says Goldman Sachs, would be driven by improvement in cost competitiveness, rising contribution from fee income and higher productivity arising from economies of scale.

“We believe Axis’ current valuation does not capture the upside potential from its rapid growth in franchise value. Investors appear to be concerned about the rapid growth witnessed by the bank in the past, and hence, the potential for increase in credit losses impacting the bank’s earnings growth prospects adversely in our view. We believe the bank’s credit portfolio is concentrated in the large corporate segment, which is less vulnerable to rapid deterioration in credit quality. As such, we believe increase in credit costs is unlikely to impair earnings growth expectations materially,” the note said.

Anand Rathi puts 'buy' on Bharat Electronics
8 Sep, 2008,

Anand Rathi Securities has a 'buy' call on Bharat Electronics around the current price of Rs 974 for target Rs 1,140 and stop loss of Rs 900.

Based on the chart pattern to date, the stock is likely to get support around Rs 930.

Bharat Electronics, after a descent consolidation, exhibits a trend reversal; rise in RSI from over sold zone indicates a medium term buy.

Analysts'Picks: Tata Motors
27 Aug, 2008.

Tata motors
cmp: Rs 433.50
target price: Rs 454

HDFC Securities has maintained its ‘sell’ rating on the stock with a revised target price of Rs.454 (from Rs.431 earlier). The brokerage believes due to uncertainties looming over the company’s Nano project at Singur and 24-35% equity dilution would cap the upside in the stock.

Also the Jaguar-Land Rover (JLR) acquisition would continue to be an overhang on Tata Motors’ stock, the note added. “We are revising our earnings per share estimate upwards by 9% (Rs.29.9 earlier) mainly on account of lower equity dilution by reducing the amount of funds raised through the equity route. We value the company on an SOTP basis with the core business valued at Rs 293 per share and subsidiaries at Rs 161 per share,” the note to clients said.