Sunday, September 13, 2009

14 stocks to watch out for in this rising market

The Indian stock markets have run up a lot over the last couple of months and valuations are also looking a bit on the higher side. Though sentiments and momentum in the market are very strong, yet it makes sense for investors to pick and chose their stocks carefully. It is, therefore, imperative to stick to companies which enjoy leadership position in their respective industry and are still quoting at decent valuations.

The Economic Times short-listed 14 such stocks as recommended by Angel Broking, Invest Shoppe India Ltd and Motilal Oswal Financial Services Ltd. These stocks look attractive at the moment and may be considered for buying for future gains.

TULIP TELECOM: Strong technical advantages in its segment of operations, continuing engagements with high-value clientele with big technology spends and bright prospects for new business segments give Tulip IT an edge in the domestic market. Buy this stock with a price target of Rs. 1375 with a one year time horizon.

PUNJAB NATIONAL BANK: Apart from robust growth in fund-based income, the bank’s other income has grown at a healthy pace. The technology initiatives along with prudent lending practices would also help towards keeping costs under check and maintain asset quality. This stock is attractive at its current market price of Rs. 705.

RELIANCE INDUSTRIES: Considering it has successfully executed its two mega ventures(KG basin gas and RPL refinery) it is expected that these will be key drivers of profitability over the next few years. Considering this, the target price for the stock stands at Rs. 2,475, providing an upside potential of 20% from current levels.

CAIRN INDIA: The company is set to emerge as one of India’s leading petroleum producer - and possibly the largest onshore producer - once its oilfields in Rajasthan reach peak production in coming years. Higher production will boost revenue in the coming quarters. This stock can be bought and held for a period of 1-2years with target price of Rs. 375.

ALLIED DIGITAL SERVICES: Allied Digital Services (ADSL) is riding on high-growth domestic markets of system integration (SI); IT infrastructure management services (IMS) and remote infrastructure management (RIM). RIM is expected to be $13-15 billion opportunity for the Indian IT industry by 2013 from the current $3.6 billion, as per the latest Nasscom and McKinsey report. At the current market price of Rs. 470, it is quite an attractive investment bet.

USHA MARTIN: The company is the world’s second largest steel wire rope manufacturer. It is integrated as it has coal and iron ore mines. The company has started exporting iron ore again as it becomes economically viable at current prices. This stock can be bought with price target of Rs. 90.

MADHUCON PROJECTS: The company has a good mix of assets, which yield consistent returns and cash flows and which will facilitate it to continue investing in the high-growth businesses of real estate, power and coal. This stock can be bought with a price target of Rs. 305.

APOLLO TYRES: India’s premier tyre company is currently ramping up its capacities through both green and brown-field additions, entailing an investment of Rs 1,000 crores. It is well-positioned to take advantage of the revival in the domestic and global auto industries. With current market price of Rs. 42, the stock is attractive and can be held with a price target of Rs. 53.

IPCA LABORATORIES: The company is a market leader in anti-malarials and rheumatoid arthritis segment, has grown at steady pace in the past, posting a CAGR of 15.7% in net sales and a CAGR of 24.1% in net profit over FY2005-08 primarily driven by its domestic formulations segment. The stock can be bought at its current market price of Rs. 740 with a price target of Rs. 855.

BAYER CROPSCIENCE: The company is a subsidiary of Bayer AG Group, which is a world leader in agrichemicals, enjoys 23% market share in the Indian market. There exists substantial opportunity for company to grow its domestic business in near future. At Rs. 349, the stock is very attractive and can be held with a price target of Rs. 501.

AXIS BANK: Axis Bank’s planned equity dilution of about 17% is a precursor to marketshare gains at a faster growth rate of 8-10 percentage points above the industry over the next few years. The stock can be bought with a 12-month price target of Rs. 1,106.

BHARTI AIRTEL: The company is India’s largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBUs) -- Mobile Services, Airtel Telemedia Services & Enterprise Services. The current market price of Rs. 425 is attractive for future gains.

GVK POWER & INFRASTRUCTURE: Since January 2009, there have been several positive developments that improved returns on project SPVs and addressed liquidity issues for the company. It is an attractive stock at its current market price of Rs. 50.

BAJAJ AUTO: The company's August total volumes grew by 6% YoY to 213,072 units (v/s est 205,000), with improvement in both domestic sales (~6% growth) and exports (~5.7% growth). Bajaj's domestic sales were at 137,908 units, whereas exports were at 75,164 units. Bajaj Auto 1QFY10 results are above estimates, driven by higher export realizations and higher operating leverage. The stock is an attractive addition to equity portfolio at its current market price of Rs. 1,271.

Disclaimer: These stock recommendations are those of the respective broking and financial advisory firms and in no way represent the recommendations of The Economic Times. Investors are, therefore, advised to exercise caution and do their own research before going in for any stock pick.

Source: The Economic Times

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