Stocks you can pick up

Thermax
CMP: Rs 733.9
Target Price: Rs 812

HSBC Securities has maintained its 'overweight' rating on Thermax, and raised the price target on the stock from Rs 635 to Rs 812, expecting a 40% compounded growth in earnings between FY07 and FY10. "Industrial boiler market looks set to continue to remain robust driven by new investment, expansion and replacement demand from various sectors," the HSBC note to clients said.

"Thermax is setting up a new manufacturing facility in Vadodara for high-capacity boilers up to 200 tph, and expects this to go on stream by April 2008. It is a leading player in the captive power plant segment, and expects to continue to benefit from the captive power plant capacity addition by new as well as existing customers," the note added.

Sun Pharma
CMP: Rs 979.35
Target Price: Rs 1,279

Merrill Lynch has reiterated its 'buy' rating on Sun Pharmaceuticals with a price target of Rs 1,279 after Wyeth's request to block Sun/Teva's generic launch of a hyperacidity drug was denied recently. The investment bank feels Sun could look for a settlement with Wyeth on this issue or look to launch the generic with a joint venture partner.

"Given the high risk involved for both the innovator and generics players, and the uncertainty of the final litigation outcome, we believe there is a strong chance of a settlement. This could allow launch of generic Protonix before the January 2011 patent expiry," Merrill said in a note.

"Assuming Sun were to launch on a profit sharing, but low-risk, basis with another generics player, we estimate the company could generate sales of $115 million and profits of $100 million (Rs 20 EPS, 34% upside) during the shared-exclusivity period (with Teva and an authorised generic). In terms of NPV, we believe this one-time opportunity could be worth around $152 million or about Rs 30 per share," it added.

Bharti Airtel
CMP: Rs 918.35
Target Price: Rs 1,050

Citigroup has rated Bharti a 'buy', with a 12-month price target of Rs 1,050, citing strong growth prospects as the main reason. "We believe robust wireless market expansion and Bharti's ability to capture this growth profitably will be a recurring theme. We estimate FY07-10 earnings CAGR (compounded annual growth rate) of 32.7%, to more than double the broader market," the investment bank said in a note.

"We also expect the tower company's (Bharti Infratel) hive-off to be a value accretive looking beyond the immediate impact on margins, given Bharti's stated intentions to be a minority stake owner in the tower company," it added.

Larsen & Toubro
CMP: Rs 2,783.15
Target Price: Rs 2,921

Edelweiss Securities has reiterated its 'buy' rating on L&T, valuing the company at Rs 2,921 per share. "Positive surprises to our base case SOTP (sum-of-the-parts) valuation can come from higher-than-expected order inflows, better operating performance from international ventures, and margin uptick.

We believe that the risk-reward ratio for L&T is favourable and recommend long-term investors to view any weakness in the stock as a buying opportunity," the brokerage said in a note to clients.

Praj Industries
CMP: Rs 238.20
Target Price: NA

Prabhudas Lilladher is positive on the prospects of Praj Industries, but has not rated or assigned a price target to the stock, citing opportunities available in ethanol manufacturing worldwide as the key reason.

"Praj has been an innovator and has continuously introduced new technologies for production of green fuels and is currently in the final stages of developing cellulosic-based technology for ethanol manufacturing," the brokerage said. According to Prabhudas, the company's earnings per share for 2007-08 is estimated at Rs 7.4.