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Maruti Suzuki (Buy)

CMP: Rs 1,362

Target: Rs 1,700

Diesel cars were the only silver lining for the car industry in FY-12E, growing at 20 per cent even as petrol car demand fell off the cliff after the sharp increase in petrol prices. We were worried that a tax hike on diesel cars could be a severe blow to car demand, but with no such hike announced in the Union Budget, we expect the car industry to grow at 15 per cent in FY13. We raise our FY13E/FY14E earnings estimate by 13/21 per cent, largely on currency gains. We believe the risks to our growth estimates from a possible tax on diesel cars have now been largely mitigated. We expect a 50 per cent earnings CAGR over FY12E-FY14E. We upgrade MSIL to BUY with a TP of Rs 1,700, based on 14x FY14E earnings, yielding an upside potential of 24 per cent.

Bonanza

BGR Energy (Buy)

CMP: Rs 322

Target: Rs 370

The stock was trading in a bearish trend for an extended period, from September 2010 to December 2011. During this period, value of the stock got eroded by more than 50 per cent. Recently, the stock has given an upside breakout and is trending bullish after witnessing a decent consolidation. Even the oscillators – MACD and RSI – are well-placed at comfortable levels and pointing towards more upside in coming days. Increased volumes at current levels indicate investor interest in the counter. Looking at the positive news flow in the company and the encouraging volumes generating at current levels, the stock is expected to trade higher and give decent returns. A buy is recommended in the stock at CMP for target of Rs 370 with a stop loss of Rs 299 on daily closing basis.

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