Share Bazaar News India

Shortcovering and a higher-than-expected rise in February's industrial output helped markets shrug off yet another jolt from rising inflation. Indices erased early losses, and came back with a smart rally to end with some strong gains. The Nifty closed at 4,778 up 45 points, while the Sensex shut shop at 15,808 up 113 points.

Deepak Mohoni of trendwatchindia.com is positive on TCS, Satyam and Tech Mahindra.

“This is a very important week because if one considers the weak range ever since the January 22 crash, this has been the narrowest range for the Sensex. It’s about 632 points. This kind of volatility and contraction is usually seen before the next move begins. Any move that takes us to a one-month high or a one-month low could be the beginning of a bigger move. Right now, we are settling low at these levels waiting for something to happen,” stated Mohoni.

Here’s how Deepak Mohoni views the stocks on board:

On Divi’s Lab, TCS, Satyam:
Stocks like Divi’s Lab are fairly safe plays. So, if the market reverses, they don’t fall very much. Among the heavyweights we like TCS and Satyam and among the midcap stocks NIIT Tech, Tech Mahindra and Sasken.

But I would stay away completed from anything linked to finance, whether its broking companies, banks or anything linked to interest rates.

Ashish Maheshwari of India Capital is positive on Allied Digital, ICSA India and Gujarat Industrial Power.

Here’s how Ashish Maheshwari views the stocks on board:

On Allied Digital:
The business model of Allied Digital is a very unique company operating in a niche segment, which is remote infrastructure management and IT security related businesses. In this particular space, there is a huge demand that is going to come in the next 1-2 years. If we see the data, there is around USD 70 billion market for IT security and remote infrastructure management kind of businesses. So, we are very upbeat about this company’s prospects.

We are expecting a CAGR of around 100% from FY07-10. This stock is available at around 9 PE multiple from FY09 earnings, which is quite low in our view.

On ICSA India:
This company has been doing very well in the last few years. In FY06, the company was having a turnover of around Rs 81 crore. We are envisaging that in 2010, it will be around Rs 1,000 crore, and on the bottom line side, the company was having a profit of around Rs 15 crore in FY06, we are expecting it to touch at around Rs 200 crore.

Recently, they have ventured into the EPC contract for oil and gas and water management. So, this is a unique company. We are advising our clients to look at those companies right now which are having business model that are recession proof and into high growth trajectory. So, if any recession is there or any slowdown, these businesses should be recession proof. This is a good example and we are expecting a price target of around Rs 600 in a year’s time.

On Gujarat Industrial Power:
This stock has come down quite drastically in the last 2 months. In January, it was quoting around Rs 180 and now its available for Rs 90. The fall is primarily due to all the stocks and power space which were falling after the Reliance Power listing. But there is nothing wrong with the fundamentals of the company. It’s having around 550mw of power install capacity. In 2008, this capacity will be augmented to around 800mw and by 2011 we are expecting their next round of expansion where they are adding around 500 mw more.

So, next year I am expecting an EPS of around Rs 12 in this stock. This stock is available at around 8 PE multiple. Compared to its listed peers like NTPC, Neyveli Lignite or GVK Power, its available at almost 50% to 75% discount. The stock has almost bottomed now and if the investor holds for a year, the stock may touch Rs 140 to Rs 160 levels once again.

Disclosure: I personally do not hold any of these stocks. But our company has prepared a buy side report on these stocks and they are advising our clients to take positions into this.

Source: Moneycontrol.com