Thursday Market Updates: Shares To Be Bought And Sold
The Indian Stock Market Benchmark BSE SENSEX closed at 17362.10, 207.43 points lower than yesterday. Whereas the Nifty closed at 5221.05, 68.30 lower than yesterday.
Here’s the lookout for some shares which should be bought or sold.
SAIL stocks are neutral this time. It is expected to increase its saleable steel production capacity from 12.5mn tonnes to 23.1mn tonnes by FY2015. The stock is currently trading at a 9.1x and 6.4x FY2012 and FY2013 EV/EBITDA, respectively. Given the company’s modest volume growth in the near term and fair valuations, it is to remain neutral for the time being.
It is recommended to sell Nestle India stocks which is rating on the stock with a target price of Rs 3578. Nestle’s monopoly in Maggi noodles would be difficult to maintain for long time post the entrance of big players. Competition is rising in almost all the categories while Nestle is expanding capacities which would force the company to maintain volume market share. Therefore, there’s too much pressure on pricing power of key brands. Nestle trades at a ~39% premium to the FMCG sector and it’s premium price would narrow. And the target price could be revised to Rs 3,578 (Rs 3,400 earlier).
Shares of Gujarat Gas Company is to be maintained. Recent hikes in industrial and CNG segment provides cushion to the profitability and margins in coming quarters. At CMP of Rs 444 stock trades at 16.6x CY12E EPS and 3.9x P/BV, it is advised to buy ratings on GGCL with target price of Rs 481.
Shares of Glaxo SmithKline Pharma shouyld be revised. GSK is expected to report 7% revenue growth in 2011 and 12% growth in 2012. The EBIDTA margins contracted from 35.31% in 2010 to 31.6% in 2011 and 32.9% in 2012. Earnings will grow at a CAGR of 7% to Rs 6.7bn. the target has to be revisee on the stock to Rs 1,714 and downgrade the stock one notch to Reduce.
Though Mannapuram General Finance continue to grow at a healthy pace, but with rising competition and possibility of NPA recognition on 90dpd as mentioned in the draft discussion paper could hurt growth and margins. It is advised to downgrade and hold with target price of Rs 65.
