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BHEL, Indian Oil stocks maintain momentum

BHEL, Indian Oil stocks maintain momentum

We scan through dozens of research reports from investment houses every fortnight to present you the six most relevant stock recommendations and a sector analysis.

We scan through dozens of research reports from investment houses every fortnight to present you the six most relevant stock recommendations and a sector analysis.

NIIT TECH

IDBI Capital:

“NIIT Technologies reported a flat performance in the first quarter, which was in line with our estimates, adversely impacted by rupee appreciation. The share currently trades at 12.5 times and 10.9 times 2007-8 and 2008-9 estimated earnings, which is a significant discount to its peers making the stock attractive.”

BHEL

Edelweiss Securities:

“First quarter results were in line with expectations, with both revenues and earnings registering 22% YoY growth. We expect Bhel to maintain its market share of about 64% over the next couple of years. Order booking momentum, capacity ramp-up and earnings growth lead us to retain our Buy rating.”

INDIAN OIL CORPORATION

IL&FS Investmart:

“Net profits have improved 10% YoY due to 60% higher refining margins, 20% higher crude throughput and forex gains. We expect the subsidy sharing mechanism for the coming financial year to be announced soon, bringing some clarity to the sector. Stock is trading at a PE of 6.76 times 2008-9 earnings.”

CONCOR

India Infoline:

“Concor’s market share has increased from 25% in 1996-97 to 31.5% in 2006-7. The stock is trading at 15.9 times 2008-9 earnings. While multiples appear to be high, robust earnings growth, high return ratios, strong revenue visibility and dominance in rail business justify the valuations. Our target: Rs 2,515.”

ORIENTAL BANK OF COMMERCE

IL&FS Investmart:

“OBC is on a growth trajectory and is focusing to improve its retail exposure, which is currently at 18% of its total portfolio. OBC’s current CASA ratio is 30% lower than its peers. The bank’s capital adequacy ratio and BPLR stands at 13.9%, indicating room for raising capital.”

BAJAJ HINDUSTHAN

Edelweiss Securities:

“Factoring in higher-thanexpected operating losses in the sugar segment and reduced alcohol realisations, we expect the company to post a loss of Rs 150 crore for 2007-8. The balance sheet is likely to weaken further with inventory pile up, negative return ratios, and high debt/equity ratio of about 2.”