Research Calls

Tata Steel
Buy

Refco has maintained its buy rating on Tata Steel after the company posted strong results. It says the company's contract sales are expected to provide stability to earnings at a time when steel prices are ruling at their all-time high levels.

Considering Tata Steel's captive raw material sources, the research house expects price hikes to flow directly into the bottomline. It has revised its price target to Rs 450 from Rs 350 and feels that current valuations of a P/E of 5.4x are inexpensive.

Dishman Pharma
Outperformer

HDFC Securities has maintained its outperformer recommendation on Dishman Pharma, citing strong revenue growth in the December quarter. Apart from new contracts signed by the company, the research house is bullish on revenues from CRAMS (contract research and manufacturing services).

It estimates Dishman's FY05 PAT to almost double to Rs.38.8 crore from Rs 20.7 crore in FY04.

Grasim
Outperformer

Enam has recommended an outperformer rating for Grasim as the recent results showed improved contribution from all divisions.

It expects contribution from cement to improve in line with higher prices during Q4FY05, and sponge iron business to maintain its performance despite rising input costs. At 10x FY06E, Enam feels that Grasim is undervalued and puts out a target price of Rs 1,700.

Grasim
Buy

Merrill Lynch has put out a buy on Grasim, citing strong results with the non-cement businesses belying concerns of a potential downturn. The brokerage has a positive outlook for the cement sector and forecasts a 21 per cent earnings growth CAGR for Grasim over FY05-07E.

It says a key factor to watch would be the trend in demand for viscose staple fibre (VSF) and pegs an EPS target of Rs 115.8 for FY06.

Hindalco
buy

Citigroup Smith Barney has put out a buy on Hindalco, citing improved aluminium price forecasts which are expected to drive a sustained period of earnings growth.

It has raised its FY06 and FY07 EPS estimates by 4 per cent and 1 per cent, respectively - factoring in the higher commodity price forecasts - and the target price to Rs1596.

ITC
Buy

Citigroup Smith Barney has come out with a sell rating for ITC, citing net cash outflow from the recent ordinance regarding excise tax.

It feels that net cash outflow in the worst case scenario in CY05 could be as much as Rs 2,100 crore, which could affect non-operational earnings in future. It feels that the scrip is expensive at a P/E of 18.3x FY05 estimates and has put out a target price of Rs 1,275.

Crompton Greaves
Buy

Motilal Oswal has maintained a buy on the company after its buoyant results exceeded expectations. It feels that the company's buoyant order-book, together with improving operational efficiencies and lower costs will lead to a 27 per cent growth in earnings in FY05.

At a P/E of 10.9x FY06E, it feels that the stock is attractively valued.