Broker alert : Buy Maruti, Tata Steel, Firstsource, Cairn India

Stocks are falling, gold’s glitter is getting bigger and bigger, and your neighbour is happily making money, but you are stuck wondering what to do next. Sweat not. Firstpost brings you some recommendations of brokerage houses that can serve as a quick guide amid so much of market turmoil.

[caption id=“attachment_82913” align=“alignleft” width=“380” caption=“Despite short-term concerns, Motilal expects the company to do well based on strong demand and volumes. Reuters”]  [/caption]

Maruti Suzuki: Motilal Oswal is bullish on Maruti and has a price target of Rs 1,418 per share vis -a-vis its current market price of Rs 1,088.5 as on 13 September. Despite short-term concerns, Motilal expects the company to do well based on strong demand and volumes, which are expected to double over the next five years to 4.5-5 million units. Also, a change in consumer preference for alternative cars to diesel against petrol and the company’s focus on widening its existing sales and service network augurs well for it in the long term.

Tata Steel is the top pick of brokerage firm Morgan Stanley (MS) in the Indian metal space. MS maintains its overweight status on the stock and has a price target of Rs 603 per share in their report released on 9 September. The stock is trading at Rs 466 per share on 13 September. While short-term worries like the muted demand in Europe and overall weakness in the markets may have been a drag on its stock price, the report expects this to come down as new projects come close to completion. Tata Steel is expected to commission a 3 million tonne steel capacity in the next 2-3 quarters, its largest-ever capacity addition so far.

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Bank of America puts out a ‘Buy’ coverage on Firstsource with a price target of Rs 17.5 per share compared to its current market price of Rs 12.86, reflecting an upside potential of 36 percent. Despite a weak first quarter, the brokerage frim expects the company’s topline growth to improve in the second half of 2011-12. Also, liquidity concerns have eased substantially as the company refinanced its FCCBs in August 2011 which are due for maturity in December 2012. Out of the $296 million required, it already has $200 million in cash and is expected to generate $50-60 million over the next six quarters.

Nomura reaffirms its ‘Buy’ rating on Cairn India as it believes that the stock has already factored in most of the negativity in the market. It has a price target of Rs 350 per share compared to its current market price of Rs 286.6 per share. With the year-end impasse coming to an end, the report expects the company to once again start focusing on raising production and maximising resource potential. It expects the company’s net profit to rise by 21 percent in 2011-12.

Deutsche Bank is bullish on Mahindra & Mahindra and has set a price target of Rs 900 per share from the current market price of Rs 784.15 per share, reflecting an upside of 15 percent. The company expects the tractor division - which comprises 50 percent of profits - and utility vehicle to drive earnings. Earnings per share (EPS) is expected to increase by 10.6 percent to Rs 46.29 per share.