Stock and Market views

Titan Industries: Regaining the lustre



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Trading desk

Idea
Current price: Rs 69.5
Target price: Rs 63

The scrip has started losing momentum after a steep climb from 53 to the current levels. If it does react from current levels, the downside target could be about 63. However, it's possible that it could run up for another session or two and it's tough to set an upside target. Keep a tight stop loss at 71.5 and go short. Start booking profits below 65. If the stop is broken, go long with a stop at 71 and an initial target of 74.

Infosys
Current price: Rs 2,890
Target price: Rs 2,825-2,925 (Range trade)

Infy made an upside breakout when it closed above 2,825 last Friday. It hit a 52-week high at 2,910 just ahead of Q1 results. Today should see a lot of volatility. Infy has the potential to jump to 2,950, but it could also slide till 2,825. So, the trader should be prepared for swings between 2,825 and 2,950. Use 2,870 as a pivot. If the stock opens above 2,870, go long with a target of 2,925 and a stop loss at 2,860. If it opens below 2,870, set a stop loss at 2,880 and go short with a target of 2,835.

Tata Motors
Current price: Rs 790
Target price: Rs 810

The stock seems to have recovered from an intermediate downtrend but it is hitting resistance at 790-795. If it clears 795, an upside till 810 is possible. Keep a stop at 782 and go long. Increase the position between 795 and 798. Start booking profits above 808 because there will be a lot of selling pressure above 808-810. On the downside, there's a lot of support between 770 and 780.

The target price and projected movements given above are in terms of the next one trading session unless otherwise stated

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Analysts' corner

IDBI Bank
Reco price: Rs 120
Target price: Rs 140

The government has agreed to infusion Rs 3,110 crore to aid the bank improve capital adequacy and expansion plans in future. It has also applied for increase in authorised capital, which would further give head room for raising capital for the bank and may come out with FPO in future for any capital requirement. The bank plans to continue its focus on infrastructure development which is traditionally its forte. It also plans for branch expansion of 300 branches to its existing network of 720 branches which will improve its franchise liability. The bank has sound asset quality with provision coverage of 75 per cent, well above RBI limit of 70 per cent. Maintain buy.

— Anand Rathi Research

Titan Industries
Reco price: Rs 2,501
Target price: Rs 3,000

Volume growth in Gold recovered since H1FY10 and registered nearly 45 per cent volume growth in the fourth quarter of FY10. Expect a healthy 14 per cent volume CAGR driven by stable gold prices and pick-up in consumer discretionary demand. Consequentially, expect sales and earnings CAGR of 20 per cent and 25 per cent, respectively for FY10-12E. Improving realisations, product mix, operating leverage along with improved profitability of other businesses, will lead to 80bps margin expansion in the next two years. Expect Titan to sustain the return on equity at around 40 per cent and witness a 3x increase in free cash flows in FY10-12E. The urban discretionary demand could continue to remain healthy; Titan will be the significant beneficiary of the demand momentum. The stock is trading at 33x FY12E EPS. Maintain buy.

— Prabhudas Lilladher

Pratibha Industries
Reco price: Rs 410
Target price: Rs 508

Pratibha Industries secured a built-operate-transfer (BOT) project on annuity basis from National Highway Authority of India (NHAI). The project involves two laning with paved shoulders of Bhopal-Sanchi section of national highway (NH)-86 for 53.7 km under National Highway Development Programme Phase-III. The company has also bagged three projects worth Rs 210 crore for the construction of residential and commercial complexes. In the first quarter of FY11, the company witnessed a strong order intake, bagging two engineering, production and construction (EPC) orders and two BOT projects, totaling to Rs 477 crore. The order inflow for FY10 stood at Rs 2,685 crore. The stock is trading at 8.7x and 6.5x its FY11E and FY12E earnings, respectively. Maintain buy.

— Sharekhan

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Src: ET and DP blog and Smartinvestor.in