NSE/BSE STOCK MARKET TIPS

Sensex likely to drop to 11K next month: Religare's Chakraborty

MUMBAI: The Sensex is likely to drop further to 11K level next month as foreign institutional investors are pulling out drastically due to liquidity crisis in the global market, said Amitabh Chakraborty, president-equity, Religare Securities.

“We are seeing the near-term bottom at 11,000 for the Sensex and 3,650 for the Nifty in the month of October because FIIs are in selling mode and will continue further," he said.

Foreign funds net sold $212.30 million in equity on Monday and $156 million Tuesday on news of Lehman Brothers filing for bankruptcy, according to SEBI data. So far, FIIs have pulled out over $1 billion from India.

Chakraborty said the present on-going problem is very much concerned with the financial economy, which is likely to shift towards non-financial economy by 2009 and the slowdown in real economy would be visible.

“More and more countries from emerging economies would come under the influence,” Chakraborty said.

However, there would be a short term bounce back in near future as a fair amount of liquidity has been pumped in by US, but the mid-term outlook is grim.

Retail investors should keep away for some more time and a better option for them would be to invest in a segment having strong cash position or other options like liquid and debt funds, he said.

Deutsche Securities puts 'hold' on Indiabulls Real Estate
10 Sep, 2008,

Indiabulls Real Estate
cmp: Rs 286.80
target price: Rs 300

Deutsche Securities has initiated coverage on Indiabulls Real Estate with a ‘hold’ rating as it feels the company has limited track record in execution. Weakness in the Mumbai office market for high-end office properties, and a large free float — which allows much larger head-room for “borrowing” and selling short — are downsides for the stock.

According to a Deutsche Bank note, Indiabulls’ revenue growth would be driven by volumes and stake sale of associate and/or subsidiaries. “We expect a revenue CAGR (compound annual growth rate) of 41% over FY08 to FY11 (estimated). \

We expect EBITDA margins to drop from 72% in FY08 to 55% in FY11 (estimated), mainly driven by higher costs (land, construction, employees, SG&A).

Further, we expect the tax rate to increase from around 28% in FY08 to nearly 30% in FY11 (estimated). Thus, while we expect volume growth (around 40%), we expect PAT (profit after tax) to grow by only a 19% CAGR over FY08-11 (estimated),” the note to clients said.

However, the Deutsche Bank note added that the demerging and listing of its forays in power and retailing would drive growth and shareholder value in the near term. Meanwhile, SEZs, townships and annuities from completed projects will drive long-term growth, it added.

Deutsche Securities puts 'hold' on Indiabulls Real Estate
10 Sep, 2008,

Indiabulls Real Estate
cmp: Rs 286.80
target price: Rs 300

Deutsche Securities has initiated coverage on Indiabulls Real Estate with a ‘hold’ rating as it feels the company has limited track record in execution. Weakness in the Mumbai office market for high-end office properties, and a large free float — which allows much larger head-room for “borrowing” and selling short — are downsides for the stock.

According to a Deutsche Bank note, Indiabulls’ revenue growth would be driven by volumes and stake sale of associate and/or subsidiaries. “We expect a revenue CAGR (compound annual growth rate) of 41% over FY08 to FY11 (estimated). \

We expect EBITDA margins to drop from 72% in FY08 to 55% in FY11 (estimated), mainly driven by higher costs (land, construction, employees, SG&A).

Further, we expect the tax rate to increase from around 28% in FY08 to nearly 30% in FY11 (estimated). Thus, while we expect volume growth (around 40%), we expect PAT (profit after tax) to grow by only a 19% CAGR over FY08-11 (estimated),” the note to clients said.

However, the Deutsche Bank note added that the demerging and listing of its forays in power and retailing would drive growth and shareholder value in the near term. Meanwhile, SEZs, townships and annuities from completed projects will drive long-term growth, it added.

Deutsche Securities puts 'hold' on Indiabulls Real Estate
10 Sep, 2008,

Indiabulls Real Estate
cmp: Rs 286.80
target price: Rs 300

Deutsche Securities has initiated coverage on Indiabulls Real Estate with a ‘hold’ rating as it feels the company has limited track record in execution. Weakness in the Mumbai office market for high-end office properties, and a large free float — which allows much larger head-room for “borrowing” and selling short — are downsides for the stock.

According to a Deutsche Bank note, Indiabulls’ revenue growth would be driven by volumes and stake sale of associate and/or subsidiaries. “We expect a revenue CAGR (compound annual growth rate) of 41% over FY08 to FY11 (estimated). \

We expect EBITDA margins to drop from 72% in FY08 to 55% in FY11 (estimated), mainly driven by higher costs (land, construction, employees, SG&A).

Further, we expect the tax rate to increase from around 28% in FY08 to nearly 30% in FY11 (estimated). Thus, while we expect volume growth (around 40%), we expect PAT (profit after tax) to grow by only a 19% CAGR over FY08-11 (estimated),” the note to clients said.

However, the Deutsche Bank note added that the demerging and listing of its forays in power and retailing would drive growth and shareholder value in the near term. Meanwhile, SEZs, townships and annuities from completed projects will drive long-term growth, it added.

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.

Analysts'Picks: Infosys Tech
27 Aug, 2008

Infosys Tech
cmp: Rs 1,697.60
target price: Rs 1,703

Broking firm Edelweiss Securities has maintained its ‘accumulate’ rating on the stock as it believes that the company’s recent acquisition of the Axon group would bolster the company’s presence in the consulting space.

“The deal is earnings per share (EPS) neutral on standalone basis in FY09 (estimated), but EPS accretion in FY10 (estimated) depends on Axon’s growth and margin trajectory. Incorporating the financial impact of this acquisition, the stock trades at 16.5 times and 13.9 times FY09 and FY10 earnings respectively,” the note said. However, according to the brokerage firm, slowdown in US, significant increase in the salary hikes and attrition rate, reduction in the number of H1B visas granted by US, and incremental appreciation of rupee against US dollar, euro and GBP remain key concerns for the company.