UTI Bank
Recommendation: Buy at Rs 35
Inquire India Research
Inquire India has recommended a buy on UTI Bank at Rs 35, with an 18-month price target of Rs 60. Despite being a slow starter (compared with peers HDFC Bank and ICICI Bank), UTI Bank has emerged as the third-largest private sector bank, having attained a balance sheet size of Rs 15,000 crore. Given the estimated compounded net profit growth of 35 per cent in the next two years, the scrip appears attractive at 3.9x forward earnings and 0.9x FY03 book value.
IT services
Recommendation: Overweight
Kotak Securities
Kotak Securities is bullish on the domestic IT sector. There are early signs of improvement in fundamentals, there is better capacity utilisation and a pick up in volumes with pricing stabilising at current levels. The healthy trend in recruitment of most leading players is also a positive sign.
The brokerage house warns that there could be some short-term volatility, but most frontline stocks appear to be attractively priced. It has a market outperformer rating on Infosys Technologies, Satyam Computers and Digital GlobalSoft, while Wipro, Polaris, Hughes and Mascot Systems get a market performer rating.
MTNL
Recommendation: Sell at Rs 130.8
Refco Global Research
Refco Securities believes that the proposed merger of Mahanagar Telephone Nigam (MTNL) and Bharat Sanchar Nigam (BSNL), and the expected delay in MTNL's divestment are significant negative triggers for the stock. The stock has an estimated downside of 27 per cent --to around Rs 95 levels from the prevailing market price of Rs 130.
In terms of fundamentals, competition will further intensify with the Tatas taking controlling stake in Hughes Tele.com, and other private operators such as Reliance and Bharti also launching their services in Mumbai.
Tata Steel
Recommendation: Buy at Rs 124
CLSA Securities
In an update after having discussions with the company's management, CLSA Securities has come to the conclusion that improved domestic demand, firm product prices and a better product mix will lead to a strong rebound in Tata Steel's profitability in the second quarter.
The brokerage house has set a price target of Rs 150 against the prevailing price of Rs 124. Moreover, steel prices are expected to stabilise and plateau by 2004, rather than decline sharply as many anticipate. The scrip is trading at 8.2x its estimated FY03 earnings of Rs 15.1 per share.
Tamil Nadu Newsprint
Recommendation: Buy at Rs 46
Kotak Securities
Tamil Nadu Newsprint is recommended as an attractive medium-term buy at Rs 46 by Kotak Securities, with a price target of Rs 65. Being one of the few fully integrated paper mills in the country with the capability to manufacture both newsprint and writing/printing paper, is well-positioned to reap the benefits of improving fundamentals in the paper industry.
More so, as it is also one of the most cost-efficient paper mills in the country. It is totally self-sufficient in power, an important input, and has a highly modernised plant. The scrip is trading at 5.5x its estimated earnings of Rs 8.4 per share for FY03.
