Here are four stocks that securities firms like DSL Merril Lynch, CLSA and Refco put a 'buy' on. Read on:
Bharat Forge
(Buy, Target price Rs 1,808)
DSP ML has initiated coverage on Bharat Forge with a 'buy' and a 12-month price target of Rs 1,808. It believes that the market opportunity for the company's operating segments is large at around $8 billion.
Bharat Forge has the credentials to deliver $1 billion sales by FY2008E, up from $350 million in FY04.
The company's earnings are expected to register 60.6 per cent CAGR over FY05-07E, as ongoing capacity expansions are largely pre-sold. Earnings accretions of 23.3 per cent and 17.0 per cent are expected in FY06E and FY07E respectively.
Reliance Industries
(Buy, Target price Rs 676)
CLSA has reiterated a buy on Reliance with a 12-month price target of Rs 676. Reliance's refining margin upcycle is expected to continue till 2009.
The cyclical peak in petrochemicals (45 per cent of profits) is still 12-15 months away and profits from the business will be maintained beyond this peak as Reliance is expected to expand capacity by 20 per cent.
CLSA expects the first phase of expansions to come on stream in Q4 FY06. The scrip is trading at a 28 per cent discount to the market and a 20 per cent discount to CLSA's sum-of-parts value.
Titan Industries
(Buy, Target price Rs 392)
Refco Sify Securities has initiated coverage on Titan Industries with a 'buy' and a price target of Rs 392.
According to its report, Titan Industries, a market leader in watches and branded jewellery, is on a comeback trail. It is expected to post a CAGR of 23 per cent in branded jewellery sales from FY04-07, while Sonata watches would grow in volumes by 15 per cent.
The research house expects the company to report a 17.5 per cent growth in topline and 33 per cent growth in adjusted profits over FY05-07. Management restructuring and capital infusion will aid earnings further.
Aventis Pharma
(Buy, Target price Rs 1,640)
Pranav Securities has maintained a 'buy' on Aventis Pharma with a medium- to long-term price target of Rs 1,640. Faster growth in strategic brands and exports/outsourcing apart from control over costs have had a positive impact on Aventis' operating performance.
Outsourcing from parent and exports is expected to be a major driver in the coming years. The outsourcing business is expected to grow 20-25 per cent in the years to come.
On the other hand, exports will push revenue and profitability. The stock is attractively valued at 15.4x CY06E earnings.
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