Market Watch as on Jan 16, 2008

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

Print Edition: 07 Feb, 2008

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

HDFC

Enam Securities: "HDFC enjoys one of the highest return on equity in the financial sector. It has sold 7.15% of its stake in Standard Life Insurance. Post sale, HDFC will start enjoying the economic benefit of its 72.5% stake in the venture. We are raising our target price to Rs 3,591 and maintain Outperformer rating."

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Recommendation	BUY
Stock Price	Rs 2845
One-year returns	82.42%
Profit Margin	53.30%
Q2 PE ratio	119.54

TATA SPONGE & IRON

Dalal & Broacha: "The company plans to install 100 MW power plant at the pithead for utilisation of coal middlings. The power generated will be used for captive consumption and excess capacity will be supplied to the grid. This could add substantially to the bottom line. We recommend Buy."

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Recommendation	BUY
Stock Price	Rs 269
One-year returns	130.01%
Profit Margin	1393.91%
Q2 PE ratio	23.23

VARUN SHIPPING

SBICAP Securities: "Varun has an LPG carrier fleet which is the largest in terms of both fleet size and cargo-carrying capacity. It has increased its presence in the lucrative offshore segment by acquiring two highend anchor handling tug supply. We initiate our coverage with a Buy rating and a price target of Rs 139."

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Recommendation	BUY
Stock Price	Rs 90
One-year returns	32.35%
Profit Margin	166.92%
Q2 PE ratio	23.27

BHEL

Asit C Mehta: "Demand for power plant equipment is expected to remain strong. The company is planning to add further capacities. Outstanding order backlog of Rs 72,600 crore coupled with increased manufacturing capacities will drive growth over the medium term. We recommend Buy with a price target of Rs 2,970."

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Recommendation	BUY
Stock Price	Rs 2308
One-year returns	104.12%
Profit Margin	63.67%
Q2 PE ratio	164.27

BAJAJ HINDUSTHAN

Edelweiss Securities: "In 2006-7, the company reported a meager 18% YoY growth in revenues, despite higher sugar capacity and doubling of distillery capacity. A highly leveraged balance sheet, lower single digit return ratios and non-supportive cash flows remain the biggest concerns. We maintain Sell recommendation."

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Recommendation	SELL
Stock Price	Rs 315
One-year returns	58.59%
Profit Margin	-75.79%
Q2 PE ratio	52.3

SUN PHARMA

Edelweiss Securities: "Sun Pharma has given steady top-line and bottom-line growth of 20%. Its domestic formulations segment has performed well. The US business is expected to be the company’s forte over the next couple of years. We maintain our Accumulate recommendation."

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Recommendation	BUY
Stock Price	Rs 1097
One-year returns	5.80%
Profit Margin	36.38%
Q2 PE ratio	112.17

All stock prices as on January 16. EPS is not annualised for computing PE ratio. Profit margins are based on half-yearly results for 2007-8. Some financial jargon: YoY = Year on Year; CAGR = Compounded annual growth rate; EBITDA = Earnings before interest, taxes, depreciation and amortisation.