Broker alert: Adani Power and Jindal Steel are bad bets

Here are some views from brokers/analyst on various companies

•CLSA has downgraded Jindal Steel & Power to under perform with a target price of Rs 425 per share. The stock is currently trading at Rs 421 per share. There are concerns over delays at its Angul Steel plant and further delays are also possible, given execution slippages in the crucial coal gasification unit. CLSA expects the commissioning to happen only in October 2013 compared to its earlier date of April 2013. Further, the international research firm has cut its earnings estimates by 4-5 percent due to the delay in commissioning and free power to Orissa.

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•Angel broking maintains an accumulate rating on Mindtree with a target price of Rs 708 vs its current price of Rs 634, reflecting a growth of 11.7 percent. The company posted a healthy set of numbers for the June quarter as its net profit rose by 28.6 percent to Rs 89 crore while revenues rose by 7.1 percent to Rs 563. The company’s management has also said that it is confident of meeting Nasscom’s average revenue growth guidance for FY 2013 and has also given offers to 3,000 campus graduates. In the last one year, the stock has risen 76 percent, outperforming the Sensex which has fallen by 7.6 percent.

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•Adani Power has been downgraded by JP Morgan to underweight with a target price of Rs 38. It is currently trading at 47.9 per share. One of the prime reasons for the downgrade is that the coal production from the parent’s captive mine in Indonesia has been disappointing, increasing its exposure to spot imports amid a sharply depreciating rupee which has taken a severe toll on profitability.

Investors concerns about the stock was also seen in its stock price which fell by 58 percent in the last one year, much more than the 7.6 percent fall shown by the bench mark index of 7.6 percent. Adani Power is a part of the diversified Adani Group, with interests ranging from infrastructure development to Fast Moving Consumer Goods.