Broker alert: Concerns over Sintex' FCCBs overdone

Firstpost tries to make your life easier by offering you a list of stock recommendations from various brokerages houses. Here’s the list:

•While removingSintex Industriesfrom its ‘Conviction Buy List’,Goldman Sachscontinues to maintain a ‘buy’ rating on the company with a price target of Rs 200 per share. The stock’s current market price is Rs 93.1 per share. With high expectations on order execution and revenue growth in its domestic monolithic and pre-fabs segment, it says that “concerns relating to the FCCB (foreign currency convertible bonds) are overdone, as, so far, only $110 million has been utilised by the company and the payment for this is due only in March 2013”.

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In addition, the company has a strong cash balance and investments of around Rs 900 crore, which should help adequately cover any repayment liabilities. For the year ended March 2012, the brokerage expects the company to report a 19 percent rise in revenues but a 1.7 percent decline in profit.

•Angel Broking has a ‘buy’ rating on Tata Sponge Iron, with a price target of Rs 382 per share. The stock’s current market price is Rs 299.6 per share, reflecting a growth of 27.5 percent. It expects the company to report a 16 percent compounded annual growth in sales between March 2011 and March 2013 due to the resumption in sponge iron production and better sales volumes. For the September-ended quarter, sales fell1.2 percent, while net profit more than doubled due to a fall in raw material expenses. Over the last one year, the stock has gained 19 percent compared with the BSE Metals index, which tumbled by almost 40 percent.

•Emkay Research maintains its ‘hold’ rating on KSK Energy with a price target of Rs 75 per share. The stock’s current price is Rs 57.5. The brokerage attributes its ratings to three reasons: a significant increase in fuel costs; lower-than-expected plant load factor (a measure of capacity utilisation); and a three-month delay at its Mahanadi project. Emkay also thinks there is a limited downside to the stock price from now and that the value from the Mahanadi project is yet to be factored into the current market price. For the September-ending quarter, it incurred a loss of Rs 17.8 crore on a 52.5 percent jump in revenues.

•Antique Stock Broking is bullish on Hindustan Oil Exploration Company (HOEC) with a price target of Rs183 per share vis-a-vis the current market price of Rs116.5 per share, reflecting a growth of almost 57 percent. The company has a potential pipe line of 3 blocks under appraisal and development charges and is expected to generated strong cash flows over FY12-FY17. Over the last one year, the stock has fallen 50 percent compared to the 20 percent fall of the Sensex.

•Citi has a sell rating on Titan Industries with a price target of Rs190 per share compared to its current price of Rs185. While Titan has delivered CAGR of 32 percent and 65 percent in its revenues/earnings, it expects the momentum to slowdown due to the volatile and structurally higher gold prices, sharp diamond price inflation, challenging macro environment and increasing competition.