Stock Tips For Medium Term Investments From Motilal Oswal
Mahindra and Mahindra
Recommendation: Buy
MARKET PRICE: Rs 1067.45
TARGET PRICE: Rs 1184
M&M has gone from strength to strength during the quarter. Its market share in overall tractor sales stands at over 40%. It is also expected to benefit from the government’s thrust on the rural economy. Tractors volume growth is seen 6-8% in 2HFY10 and 6-8% CAGR over next 2-3 years.
UNION BANK
Recommendation: Buy
MARKET PRICE: Rs 283.80
TARGET PRICE: Rs 324
Union Bank has a balance sheet size of over Rs 1 lakh crore. Earnings estimates upgraded by 2% for FY10 and by 4% for FY11. The stock trades at 1.1 times FY11E book value and 4.7 times FY11E earning per share. RoA and RoE will remain at over 1.2% and 25%, respectively, in the next two years.
DECCAN CHRONICLE
Recommendation: Buy
MARKET PRICE: Rs 150.90
TARGET PRICE: Rs 188
Deccan Chronicle Holdings (DCHL) is a print media focused company based in Hyderabad. DCHL intends to sell part or its entire stake in its IPL venture, The Deccan Charger Sporting Venture. The team’s recent win in the IPL2 will enable the company to get better valuation.
We estimate PAT growth of 44.7% YoY to Rs 65.5 crore in 2QFY10.
PHOENIX MILLS
Recommendation: Buy
MARKET PRICE: Rs 192.80
TARGET PRICE: Rs 220
Phoenix Mills has emerged as the leader for large scale, mixed format retailed developments. PML is a low-risk play on the domestic consumption story, without retail specific risks. We estimate PML’s revenues and net profit to grow at a CAGR of 58% and 51% respectively, over FY09-12.
SHRIRAM TRANSPORT
Recommendation: Buy
MARKET PRICE: Rs 434.35
TARGET PRICE: Rs 504
We are surprised by the high amount of cash on the balance sheet over last three consecutive quarters. We believe SHTF is consciously keeping higher cash levels on balance sheet learning lessons from the liquidity crunch in 3QFY09 and expected disbursement growth in 2HFY10.
We expect STFC to report EPS of Rs. 37 in FY10 & Rs 49 in FY11.
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