Broker alert: M&M a good bet, tractor sales to boost growth

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

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•CLSA maintains its buy rating on Mahindra & Mahindra with a price target of Rs 950 per share against its price of Rs 697. M&M is optimistic on the tractor industry and expects the same to grow at 10 percent for the year ended March 2013. “M&M believes that the labour shortage theme is still intact and will continue to drive growth in tractor sales”, said the report. Also fears that PSU banks may curb tractor loans should not be a cause of worry for the company as the private banks or non-banking financial corporations (NBFCs) can compensate in case banks cut tractor lending due to rising interest rates. (PSU banks finance around 30 percent of the tractor sales).

•Kotak Securities has a buy rating on Axis Bank with a price target of Rs 1,230 per share against its current market price of Rs 883, reflecting a growth of 39 percent. It expects its Net Interest Margin (NIM)- a performance metric that examines how successful a firm’s investment decisions are compared to its debt situation - to come at 3.39 percent for the year ended March 2012 which is near the upper band of the management guidance (3.25 percent-3.5 percent). While it is concerned about the company’s exposure to infrastructure and other stressed sectors, Kotak believes that the stock is currently available at a significant discount to its historical average and hence this should be viewed as a buying opportunity with a medium to long-term horizon.

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•Goldman Sachs is bullish on Sintex Industries with a price target of Rs130 per share against its current price of Rs71. This reflects an upside potential of 82 percent. While concerns over FCCB (Foreign Currency Convertible Bonds), exposure to the eurozone through its foreign custom-moldings subsidiaries and its foray into the power business have led to a sharp 28 percent fall in the stock in the last month, it still retains its buy rating because of two reasons:

First, it expects a strong overall growth of 14 percent for the year ended March 2012, and second, it believes the concerns related to its FCCBs are overdone as the company has utilised only $110 million so far. The repayment for FCCBs is due in March 2013.

•India Infoline Research has a buy rating on Cipla with a price target of Rs394 per share compared to its current price of Rs331, reflecting a growth of 19 percent. While the stock was an under performer in the Health Care index for the last two years, it is likely to do better now as the company’s Rs 900 crore investment in Indore SEZ starts fructifying. Also inhalers presents a big opportunity for the company in the European Union and the non-US markets as the market size could be as huge as $3 billion.

It expects revenues and net profit to grow at a Compounded Annual Growth Rate (CAGR) of 17 percent and 11 percent during the financial year ended 2011-2013.At present, it is the second largest pharmaceutical player in the domestic market with a 5.1 percent share.