Stock Call

Sharekhan

Reliance Industries (Buy)

CMP: Rs 806

Target: Rs 1,040

We believe the broad regulatory charges on RIL, DGH and the ministry regarding violating the PSC would have no material impact on RIL as the regulators have also been criticised of being unequipped. We have trimmed our estimates for FY12 and FY13 due to lingering concerns on the global macro environment. In our opinion, the same is likely to reflect in RIL's petrochem and refinery business. So, we have revised down our net profit by nine per cent for FY12 and by eight per cent for FY13. We have arrived at a revised target price of Rs 1,040 for RIL (by the sum of the parts [SoTP] valuation method), 13 per cent lower than the previous target price. We believe most of the negative aspects are already priced in the stock and retain our ‘Buy' rating on the stock.

Sushil Finance

Corporation Bank (Buy)

CMP: Rs 439

Target: Rs 805

Corporation Bank is one of the leading south-based bank with a business size of above Rs 1.9 trillion. The GOI holds 58.5 per cent stake while the other major shareholder LIC holds 25.5 per cent stake. Corp Bank has managed to grow at a decent pace in the past few years and maintained a high quality asset profile. However, in light of challenging credit off-take conditions and considering the steep sequential slide in its NIMs during Q1FY12, we have reduced our business and NII growth estimates. The Bank currently trades at an attractive valuation of 0.8x FY13E ABV & 4.1x FY13E Earnings. We believe the stock can trade at 1.4x P/ABV given its sustainable 20 per cent ROE. We maintain ‘Buy' with a revised price target of Rs 805.

Anand Rathi

Bajaj Corp (Buy)

CMP: Rs 126

Target: Rs 155

Following a management meet, we have a positive take-away on Bajaj Corp. The company has sustained the strong performance by its current range of hair oils. Margins are expected to further benefit from the fall in raw material prices and possible price hikes. Going forward, the company targets inorganic growth with sharp focus on acquisitions. The company is looking aggressively to acquire a consumer company/ brand in coming quarters. It has indicated cash of Rs 400 crore on its balance sheet and debt would be utilised to fund acquisitions. To drive inorganic growth, it has inducted Mr Jimmy Anklesaria on the board. We retain buy on the stock.

Elara Securities

Techno Electric (Buy)

CMP: Rs 199

Target: Rs 260

Techno Electric and Engineering Company is a power EPC company, operating across the value chain, viz, generation, transmission and distribution over the past 4-5 decades. TEEC's strong relation with clients, ability to work on customer advances and prudent execution capability has allowed it to operate on low working capital and improve margins consistently. Subsequently, return ratios have remained upwards of 20 per cent consistently. We expect the company's EPC business to report revenue and EBITDA CAGR of 17 and 19 per cent respectively over FY11-13E. At CMP of Rs 196, the stock offers 33 per cent upside. We recommend ‘Buy' on TEEC.

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