Broker alert: Four stocks to sell and why

After the results of the following four companies, Firstpost brings you views, about which companies you must sell and why.

Here is the list:

• Concerns over slow retail demand has led ICICI Securities to further lower the target price of Hero MotoCorp to Rs 1,733 (it is currently trading at Rs 1,900). According to the report, the eight percent growth clocked by the company in December 2011 spooked many into believing that rural India may be facing a slowdown. Therefore, they lowered their earnings estimates for the financial year 2012 apart from also expecting a tough financial year in 2013. ICICI further says that they do not believe rural India is a permanent buffer to urban India and that higher competition in the executive motorcycle segment and scooters will make it increasingly difficult for the company to maintain its market share.

•HSBC Research is bearish on Oberoi Realty with a target price of Rs 200 per share against its current price of Rs 236.5 per share. While the company had bucked the industry trend in the past by rapidly launching new inventory, HSBC expects volumes to continue to remain low as new project phases cannibalise old inventory and planned new launches face further delays. Therefore, volumes could stagnate over FY12-14. However, it expects the company’s topline to grow at a compounded Annual Growth Rate (CAGR) of 24 percent during the similar time frame.

•Kotak Securities has revised its target price of Patel Engineering to Rs 83 (current price is Rs 100). The report says that it is skeptical about future growth in revenues due to lack of order inflows in the hydro power segment and uncertainty regarding financial closure of its power projects. It expects the stock to continue to under perform till the time order inflow ramps up or interest rates come down. It expects revenues to decline by 12 percent and net profit to fall by 35 percent for the financial year ended March 2012.

•Kotak Securities also has a ‘reduce’ rating on Shree Cements with a price of Rs 2,038 - its current price being Rs 2,220. While improvement in cement dispatches and cement prices led to a sharp 61 percent growth in revenues for the December quarter, the report says that it does not expect a sharp increase in prices from here on. Also, while it hascommissioned the second phase of its thermal power project, the poor state of the state electricity boardshas prompted concerns over the outlook of the power sector. Along with this, Shree Cements has not tied up with any long term PPAs for sale of power from these units. For the financial year ended March 2012, it expects sales to rise by 20.7 percent while net profit will fall by almost 20 percent.