Broker alert: Pricing edge keeps M&M in fast lane

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ICICI Securities has downgraded NTPC to ‘reduce’ from ‘hold’ and has a price target of Rs 170 per share compared to its market price of Rs 164.3 per share. Near-term concerns about supply of coal from Coal India, its main supplier, are expected to have an adverse impact on the company’s upcoming capacities and may lead to import of expensive coal. Also, the weak financial performance of most state electricity boards is also expected to affectNTPC’s capital expenditure plans.

[caption id=“attachment_98095” align=“alignleft” width=“380” caption=“For the year ended March 2012, Edelweiss expects M&M’s revenues and net profits to grow by 16.9 percent and 8.4 percent, respectively. AFP”]  [/caption]

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Edelweiss continues to remain bullish on Mahindra & Mahindra with a target price of Rs 817 per share vis-a-vis its current market price of Rs 810 per share. Aggressive pricing of its new SUV, XUV500, augurs well for the company as there is no immediate competition in that segment. In September, M&M reported a sharp 30.7 percent from a year ago and a 28.2 percent jump from the previous month in total volumes owing to robust growth in automotive and tractor sales. For the year ended March 2012, Edelweiss expects the company’s revenues and net profits to grow by 16.9 percent and 8.4 percent, respectively.

Kotak Institutional Equities maintains its ‘add’ rating on Coal India with a target price of Rs 454 per share vis-a-vis its current market price of Rs 332.25 per share, reflecting an upside potential of almost 37 percent. While the Mining Bill - which requires a company to share 26 percent of its mining profits of the preceding year for local development - will impact earnings, it could be offset by the trimming of the company’s social overhead expenses and increase in coal prices.

Citi Equities has adopted a ‘wait and watch’ policy for Piramal Healthcare with a revised target price of Rs 400 per share - earlier price target was Rs 560 - compared with its current market price of Rs 352.6 per share. With earnings expected to remain under pressure and little clarity on how the management proposes to use the cash at its disposal, Citi prefers to stay on the sidelines for the time being. Over the last one month, Coal India’s shares have fallen by 11 percent while the Sensex slipped by a mere 1.3 percent.

HSBC Research is overweight on Cairn India with a price target of Rs 350 per share compared with its current market price of Rs 272.65 per share. Reports from the company citing a gas discovery in its deep-water blocks in Sri Lanka have prompted HSBC to turn ‘overweight’ on the company from ’neutral’. In the past one week, the stock had fallen by 1.77 percent against the Sensex, which, in contrast, gained 1.8 percent.