Stocks you can pick this week

ICICI Bank
CMP: Rs 874.80
Target Price: Rs 1,085

Brokerage house Macquarie Securities has upgraded its price target for ICICI Bank by 27% to Rs 1,085. Macquarie has cited increased visibility on its capital requirements and, partly, receipt of branch licences from the RBI as the key reasons for the upgrade. The brokerage has pegged at the value of ICICI Bank’s subsidiaries at Rs 195 per share. “We also see a slowdown in opex (operational expenses), especially given the trend of lower payments to outsourced agents for loan sales,” the Macquarie note to clients said.

Tech Mahindra
CMP:Rs 1113.60
Target Price: Rs 1,280

Merrill Lynch has initiated coverage on Tech Mahindra (TML) with a ‘buy’ rating and a price target of Rs 1,280. The brokerage has forecast a 27% CAGR between FY07 to FY09, driven by accelerating IT spend by top client BT (British Telecom) and rapid ramp up by AT&T, another key client. Merrill is of the view that the company can command a premium, compared with peers, given its domain focus, higher margin and returns.

MTNL
CMP: Rs 132.30
Target Price: NA

ICICI Securities has downgraded MTNL to 'hold' and lowered earnings estimates, citing margin pressures on account of the recent tariff revision for local and national long distance calls, and also the higher-than-expected dip in realisations from its mobile service business. The brokerage has accounted for income tax refunds over FY07 to FY09 as extraordinary income. "Accordingly, we value core operations at Rs117/share, tax-related upside at Rs30/share and surplus real estate at Rs27/share," the brokerage said.

S Kumar's Nationwide
CMP: Rs 77.65
Target Price: NA

Citigroup has reaffirmed its sell rating on S Kumar's Nationwide, citing rich valuations and pressure on operating margins. "Although the growth outlook for the company appears robust, at valuations of 13x FY08E (price earning ratio of 13 times estimated FY08 earnings), a 44% premium to the sector appears excessive, and we believe most of the growth is priced in," the Citigroup note on the stock said. The brokerage is of the view that the company's margins will stagnate ahead due to higher overheads on aggressive rollouts of stores and expansions.

Punjab National Bank
CMP: Rs 534.15
Target Price: Rs 660

Brokerage house Motilal Oswal Securities has retained its 'buy' target on Punjab National Bank with a price target of Rs 660, citing its low non-performing asset ratio as one of the key factors. "With slippages likely to remain low, NPA recoveries can provide upside to our estimates," the brokerage said in a note to its clients.

Gujarat Ambuja Cement
CMP:Rs 136.05
Target Price: NA

Brokerage house First Global Research is now betting on Gujarat Ambuja Cement as it feels the stock is more attractively valued compared to ACC. "The margin gap between GACL and ACC has not changed over the last four quarters, although the valuation gap has definitely narrowed and, in fact, GACL appears to be less expensive than ACC," the brokerage said in a note to clients. According to First Global, ACC is trading at a price earning ratio of 17 times estimated FY08 earnings, while GACL is available at a forward PE of 14.