Stocks you can trade upon this week

Karnataka Bank
CMP: Rs 164.10
Target price: Rs 220

Deutsche Bank’s global markets research has initiated coverage on Karnataka Bank with a ‘buy’ and price target of Rs 220.

In its recent research note, Deutsche said, “We like KBL’s strategy of controlled loan growth, effective use of excess SLR securities and shedding of high-cost liabilities — features which further much-needed stability in the current volatile interest rate scenario, and potentially continued good asset quality.”

Deutsche estimates Karnataka Bank’s earnings per share (EPS) for 2006-07 at Rs 18.49 and for 2007-08 at Rs 20.59. In 2004-05, its EPS was at Rs 14.52.

Dishman Pharma
CMP: Rs 244.75
Target price: Rs 270

Motilal Oswal Securities has initiated coverage on Dishman with a ‘buy’ citing robust earnings growth prospects as the key trigger. The brokerage estimates Dishman’s EPS for 2006-07 at Rs 10.3 and for 2007-08 at Rs 15.5. In 2004-05, its EPS was at Rs 5.80. “

Dishman is likely to be one of the key beneficiaries of the increased outsourcing from India, resulting in 32% earnings CAGR (compounded annual growth rate) over FY07-FY09,” the brokerage said in a recent report to clients. “

Partnerships with large innovators like GSK, Merck, Astra Zeneca, J&J and Novartis imply good long-term potential for the CRAMS business, resulting in 25% revenue CAGR (excluding Carbogen-AMCIS ) for FY06-09,” it said.


Jet Airways
CMP: Rs 688.85
Target price: Rs 900

CLSA Securities has retained ‘buy’ rating on Jet Airways with a 12-month price target of Rs 900 post the announcement of its buyout of Air Sahara.

“We believe the new deal helps Jet to get out of a sticky situation; an early dispute resolution will likely help in accelerating the fund raising program and staggered payment will ease potential stress on cash flows,” the French brokerage said in a note to clients. “

We also believe aircraft addition plans of some airlines have slowed down and the infrastructure constraints are currently at peak. Hence, additional slots, trained manpower and additional aircraft on order by Air Sahara will all come in handy for Jet,” it said.

UTI Bank
CMP: Rs 465.05
Target price: NA

SSKI Securities has reiterated ‘outperformer’ rating on UTI Bank, post its fourth-quarter earnings. The brokerage has raised UTI Bank’s EPS estimates for 2007-08 by 3% to Rs 29.3 and by 3.8% to Rs 36.7 for 2008-09 on pre-dilution basis citing higher-than-expected increase in core earnings.

“Though the current adequacy numbers are comfortable, we expect the bank to raise equity capital in FY08. We believe that the bank has entered a successful chain of growth, enabling it to raise fresh equity capital at every stage at richer valuations to fund its strong loan expansion,” SSKI said in a recent research note.


HCL Technologies
CMP: Rs 335.20
Target price: Rs 358

Ask Raymond James has maintained a ‘buy’ on HCL, while downgrading its price target to Rs 358 from Rs 370 after the company’s January-March earnings announcement, citing “compelling valuations”.

“In view of the better-than-expected results, we have revised our FY07E (estimated) EPS to Rs 17.1 (+2.5%) and FY08E EPS to Rs 19.9 (+1.5%),” ASK said in a recent report to clients. “In-line with the recent downgrades that we had for the exit multiple for the top tier companies, we are reducing the target PE multiple for HCL Tech from 19x (times) to 18x,” it said.