Stocks you can pick up this week

Nalco
Cmp: 226.90
Target price: Rs 241

Citigroup has maintained its sell rating on Nalco, even while raising target price for the stock by 17% to Rs 241. The brokerage has cited a bearish outlook on alumina and aluminium prices as the reason for the rating. “The stock price is being supported by the current firm trends in both alumina and aluminium,” said the Citigroup note to investors.

“However, we expect prices of both these to fall from current levels, putting pressure on domestic prices and sentiment on the stock. We expect a Y-O-Y (year-on-year) fall in margins and earnings for FY08 (estimated) and FY09E,” the note further said. Nalco is already operating at full capacity, and there is limited scope for volume growth until FY10, the note added.

Crompton Greaves
Cmp: 195.60
Target price: NA

First Global has resumed coverage on Crompton Greaves (CG) with an ‘outperform’ rating. “CG trades at 23.4 times and 19 times our FY07E and FY08E earning per share and at the current price, it is one of the more attractive stocks in the capital goods space,” the First Global note to clients said.

“CG is quoting at lower valuation multiples despite high growth expectations for the company over the next few years. Considering the benefits from the company’s strategic acquisitions (Pauwel and Ganz) that are likely to flow in over the next couple of years, it is our firm belief that the stock has plenty of upside left”, the note added.

Hotel Leelaventure
Cmp: 55.15
Target price: NA

CLSA Securities is bullish on Hotel Leelaventure, citing the buoyancy in tourist arrivals as a key trigger.
“Tourist arrivals into India reached 4.5m in 2006, a growth of 16% Y-O-Y. This has driven room tariff hikes of 20-40% in key cities during the same period,” the CLSA note to clients said.

“We expect Hotel Leela to report strong results during 4QFY07 as Bangalore expansion and refurbishment in Mumbai has been completed. We believe that any significant capacity addition in the industry is still 12-15 months away and see little risks to our estimates, the note said, adding that at 13.3 times estimated FY08 earnings, the stock was trading at a discount to its peer group.

Century Plyboards
Cmp: 275
Target price: NA

HDFC Securities has rated diversified construction material company Century Plyboards a ‘buy’, citing possible stake dilution by the promoters’ one of the positive triggers. “With the ongoing boom in the housing sector, the anticipated growth in demand for plywood related products is estimated to be in the range of 25-30% p.a,” the HDFC Securities note to clients said.
“Although cement stocks have come under selling pressure recently due to recent Budget and other factors, we feel that CPIL is well placed in terms of locational advantage to overcome the harsh effects of the recent measures in a much better way. Further the anticipated dilution of promoters’ stake could also result in upward rerating of the stock,” the note added.

Havells India Ltd
Cmp: 438.65
Target price: NA

IDBI Capital has a positive view on Havells India after its Netherlands subsidiary recently acquired the lighting business of Frankfurt-based SLI Sylvania for $300 million.

“Going forward, we expect this acquisition will lead to higher utilisation of capacity in the consumer durable segment of the company on the one hand and optimisation of the manufacturing set up of Sylvania," the IDBI Capital note to clients said.

“We don’t see further dip in margins in the cables and wires segments from this level due to reduction of prices of key raw materials. At the same time the high margins from the switchgear segment will be maintained due to increased exposure to the industrial switchgears,” the note added.