Fundamentals: You can bet on Shoppers Stop but dump Hero

Here’s a list of stock recommendations by various analysts/ brokerage houses:

•Edelweiss has a buy rating on Shoppers Stop with a price target of Rs430 per share against its current price of Rs347 per share, reflecting a jump of 24 percent. While the company’s revenue grew by 25 percent for the March quarter, profitability was impacted due to heavy interest burden and slow ramp up of new stores. Overall, the company is expected to pick up on the back of its expansion plans. It plans to add eight new Shoppers Stop stores in the next three years.

[caption id=“attachment_298203” align=“alignleft” width=“380” caption=“Group plans to add eight new Shoppers Stop stores in the next three years.”]  [/caption]

•Edelweiss has a hold rating on VIP Inds with a price target of Rs 77 per share. It is currently trading at Rs 83.9 per share. While revenues grew by just eight percent for the quarter, profits were affected due to higher raw material cost on account of rupee depreciation, higher polypropylene prices etc. It has lowered its estimates and expects profits to fall by eight percent for the year ending March 2013.

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•CLSA has an outperform on CIPLA with a price target of Rs360 per share vs its current price of Rs 326 per share. It expects the company to deliver strong operating performance over the coming quarters on the back of multiple triggers like Lexapro supplies to Teva and weakening currency. Cipla is one of strongest beneficiaries of a weakening rupee. It expects improving margins over the coming quarters on back of a weak rupee and a low base.

•HSBC has downgraded Hero MotoCorp to neutral with a price target of Rs 2,200 per share against its current price of Rs 2019. The 2-wheeler sector seems to heading towards a down trading where growth in the economy segment is outpacing the executive segment as this will impact realisations of 2W companies. Second, the number of scooters in the market is increasing and the growth has outspaced Motorcycles and third, the overall 2W market has slowed which will impact the growth rates of companies such as Hero Moto and Bajaj Auto.