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Recommendations from investment houses

Recommendations from investment houses

Here we focus on how select stocks are performing and how it can benefit you.

Company Focus

Infosys Tech
Current price: Rs 2,090

Parag Parikh Financial Advisory Services maintained its buy rating on Infosys after the second quarter results: “Infosys has put in another stellar set of results this quarter with 14% quarter-on-quarter growth in revenues at Rs 3,451 crore and a 17% quarter-on-quarter growth in net profit at Rs 929 crore. The company clocked over 50% year-on-year growth in revenues and profits. The best part is a higher offshore billing realisation and improved operating margins from 29.5% to 32.1% for the quarter. After the results and an increased earnings guidance, we raise our basic earnings estimate from Rs 64 to Rs 68 per share and hence raise our March 2007 price target from Rs 1,925 to Rs 2,400 based on a 25 times forward multiple on 2007 earnings. We put a price target of Rs 3,000 for March 2008. Our discounted cash flow value is Rs 2,187.”

Reliance Communications
Current price: Rs 367

Enam Securities believes Reliance Communications will be an outperformer and sets a target of Rs 400: “We believe RCOM’s announcement of scaling up its GSM business has strategic and tactical perspectives. The higher royalty on CDMA equipment forces the operators to subsidise their offering. RCOM’s management has spelt out that Qualcomm’s current stance on royalty is the biggest challenge. RCOM’s moves provide a credible bargaining position vis-à-vis Qualcomm. A favourable outcome will ease the royalty disadvantage. The initial cost of a GSM foray in 5- 6 high value circles will not exceed $400-500 million. At Rs 367, the stock trades at 25 times the 2006-7 EPS and 18 times the 2007-8 EPS of Rs 10.8 and Rs 14.9 respectively, assuming Rs 100/share for consumer broadband. We maintain an outperformer rating.”

Sasken Technologies
Current price: Rs 431

Edelweiss is positive about Sasken Communication Technologies: “The recent Botnia acquisition enhanced the capabilities in the terminal devices segment. We remain positive on the strategy of mining tier 1 players through a combination of services and products. Sasken is poised to enhance its share in outsourced R&D spends. The stock quotes at 19.7 times its earnings and an EV/EBITDA of 12.2 times and 6.6 times on our 2006-7 and 2007-8 forecast respectively. We believe the one-year forward PE range will shift to 16-20 times. We maintain our ‘buy’ rating.”

 

Sector Scenario

Banks may outperform

SSKI is bullish on banking: “We believe the rally is far from over. A sanguine macro environment, and stable interest rate outlook will foment re ratings. Earning upgrades from the second quarter will be fuelled by strong core income and lower MTM losses. Reiterate overweight with ICICI Bank, Centurion BoP, PNB, BoB and Andhra Bank as our top picks.”