Mid-term picks

Mid-term picks

Broking house, RBS has suggested following five stocks for mid-term picks of the day

DISCLAIMER: The views expressed in these pages are from brokerages, analysts and fund managers. Readers should seek professional investment advice before acting on any recommendation.

Hindustan Zinc

RECOMMENDATION: Buy

MARKET PRICE: Rs 1,186.45

TARGET PRICE: Rs 1,529

The Company operates in the lowest-cost quartile globally owing to its integrated operations. We expect a compounded annual growth rate of 30% and 39% in revenue and EBITDA (earnings before interest, tax, depreciation and amortisation) respectively over FY10-12.

Punjab National Bank

RECOMMENDATION: Buy

MARKET PRICE: Rs 915.30

TARGET PRICE: Rs 1,342

An improving macro environment and the bank’s recent equity capital raisings have reduced asset-quality concerns. We have partially rolled back our FY10-12 provision for non-performing loans. We also see a pick-up in loan growth and margins led by liability repricing.

Crompton Greaves

RECOMMENDATION: Buy

MARKET PRICE: Rs 409.90

TARGET PRICE: Rs 443

Patni Computer Systems

RECOMMENDATION: Buy

MARKET PRICE: Rs 459.90

TARGET PRICE: Rs 550

An Improving demand environment may sustain a 2-3% quarter-on-quarter volume growth in FY10. Cash (Rs139 per share) constitutes 30% of the stock’s current market cap. We value the stock at a 25% discount to Infosys on our 12-month forward target PE (price to earnings).

Mahindra & Mahindra

RECOMMENDATION: Buy

MARKET PRICE: Rs 1,037.20

TARGET PRICE: Rs 1,138.7

M&M is on the verge of delivering a series of new products and exporting pick-up trucks to the US from its new plant in Chakan beginning in Q3FY10. This should sustain momentum in volume growth. We value the standalone unit at 12x FY11F and the subsidiaries at Rs 293.60/share.

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