Analysts' Picks

PTC

CMP: Rs 152.40
TARGET PRICE: Rs 99

HSBC Securities has downgraded its rating on PTC India to ‘underweight’ from overweight, but maintained its target price of Rs 99 for the stock. “The stock has had a strong run of 75% appreciation over the last month and is now trading at 42.7 times FY08e(estimated) earnings, which is substantially higher than the Chinese and Indian utilities average of 22.1 times. We believe it is fully priced for the next 12 months and the time has come to book profits,” the HSBC note to clients said.“Since we believe in its long term growth story on the back of higher visibility of implementation of its power projects, we maintain our forecasts for net profit CAGR at 54% over the next five years. We have not factored any future investment or dilution of equity into our forecasts,” the note added.

Oriental Bank

CMP: Rs 233.65
TARGET PRICE: Rs 280

Merrill Lynch has retained its ‘buy’ rating on Oriental Bank of Commerce with a price target of Rs 280 despite weak earnings for July September. “While core earnings have disappointed in 2Q(July-September), we maintain our buy given the low valuations (0.9 times FY09E book value with 15% return on equity) and the fact that it is one of the few banks that is providing for AS-15, giving it some buffer to its earnings. We believe OBC currently trading at 1.0 time FY08E book, could trade up to 1.1 times FY09E adjusted book given the forecast rise in ROE to +15% in FY09E on back of improving NII (net interest income, rising fee income and lower NPL (non performing loan) provisions,” the Merrill Lynch note to clients said.

IVRCL Infra

CMP: Rs 521.15
TARGET PRICE: Rs 601

ABN Amro has initiated coverage on IVRCL Infrastructures & Projects with a ‘buy’ rating and a sum-of-the-parts based target price of Rs 601.“We believe IVRCL will be a key beneficiary of the government's plans to develop the agriculture sector by increasing irrigation facilities. IVRCL’s diversification into power distribution (18% of sales) and roads should balance its product mix, as these segments are growing exponentially due to private participation,” the ABN Amro note to clients said. Adjusting for subsidiary value of Rs 158.1 per share at 15% holding company discount, the stock trades at 17.3 times FY09F (forecast) diluted EPS of Rs 24.8, the lowest among tier-2 construction companies.