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Top ten Stock Picks for medium term investment
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December 17, 2010
Top ten Stock Picks for medium term investment
APOLLO TYRES: The FY11and FY12 consolidated earnings estimates are Rs 7.8 and Rs 9.7 respectively. The FY11 consolidated earnings estimate is 11.9% higher than consensus expectation of Rs 6.9. I reiterate The 'BUY' recommendation on the stock with a target price of Rs 97.
GODAWARI POWER: The earnings estimates are below consensus, mainly because I have not included Ardent Steel in The projections. Buy Godawari PoIr with a target of Rs 276.
HCL TECH: The revenue estimates vary from Consensus by ~1%, underpinned by stronger volumes and modest uptick in pricing for FY12. The EBITDA margin forecast for FY12 is in line with consensus. The FY12 EPS
estimate is also in line with consensus. Buy the stock with a target of Rs 488.
IRB INFRA: The FY11 and FY12 earnings estimates are Rs 15.6 and Rs 15.2, 9.8% higher and 6.1% loIr than consensus respectively. I expect revenue growth of 62.6% and 48% to Rs 27.7 billion and Rs 41 billion versus consensus expectation of 58.3% and 42.3% to Rs 26.9 billion and Rs 38.4 billion in FY11 and FY12 respectively. I believe the recent stock price correction provides a good entry point for investors with a long-time horizon; The SOTP-based target price of Rs 301 (vs. consensus target of Rs 290) indicates potential upside of 34.4%.
JAGRAN PRAKASHAN (JPL): The revenue estimates vary from consensus by ~8% for FY12E. The FY12 net margin forecast of 19% is in line with consensus. The FY12 EPS estimate, hoIver, is 4% higher than consensus. Buy the stock with a target of Rs 165.
Mahindra and Mahindra (M&M): I expect EPS of Rs 41.3 and Rs 45.5 in FY11 and FY12 respectively. The FY11 earnings estimate is 8.2% loIr than consensus expectation of Rs 44.9. I value M&M using SOTP methodology at Rs 872, discounting the standalone business at 15x FY12E earnings.
NIIT TECH: The top-line estimates vary from consensus by ~5.3%, underpinned by stronger volumes and modest uptick in pricing for FY12. The EBITDA margin estimate for FY12 is 20.6% which is in line with consensus. The FY12 EPS estimate is 4.3% higher than consensus. Buy the stock with a target of Rs 278.
SHREE CEMENT: The FY11 and FY12 earnings estimates are Rs 133 and Rs 168 respectively. The FY11 EPS estimate is 5.9% higher than consensus expectation of Rs 126. I remain positive on the stock due to management's excellent track record in project execution and strong earnings visibility. Buy the stock with a target of Rs 2580.
TATA STEEL: The FY12 consolidated estimates are almost in line with consensus. I value Tata Steel using SOTP methodology at Rs 759.
USHA MARTIN: The operating profit estimates are slightly loIr than consensus as I remain cautious on volumes (The FY12E sales volume is 0.67mnt vs. the company's guidance of 0.8mnt) and margin expansion (FY12E OPM of 21.9% vs. guidance of 25% by Q4FY11). Buy the stock with a target of Rs 120. |
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