RESEARCH CALLS: HDFC

Motilal Oswal Securities recommends a Buy on HDFC at a price of Rs 1264.

HDFC has raised lending rates by 150bps over the last 9 months in line with its rising cost of funds. With banks expected to reduce their focus in retail, the competitive pressure in mortgage finance should ease.

Motilal expects HDFC to sustain its historic growth rates of 25 to 26 per cent in loan growth. Asset quality should not be an issue given the conservative lending practices of HDFC.

HDFC's Real Estate Venture Fund is likely to emerge as the next value driver and will add significantly to earnings. Currently the stock is trading at 11.5 times the FY08 earnings and 3.2 times FY08 book value.

MADHUCON PROJECTS

Emkay Securities recommends a Buy on Madhucon Projects at the current market price of Rs 221 with a target of Rs 368. The company is strongly positioned to capitalise on the huge order book bagged for various projects from NHAI, State Governments & Railways.

The company's order book to sales ratio stands at 15 times FY06 revenues which indicates strong revenue visibility.

Madhucon enjoys the highest operating margin of more than 14 per cent (last 3 years average) in the industry. With an EPS CAGR growth of 65 per cent estimated over FY06-08, the stock currently trades at 9 times FY08 earnings.

ORIENT PAPER

Anand Rathi Securities recommends a Buy on Orient paper with 12 month target of Rs 750. The stock is trading at Rs 472. currently The ongoing expansion across the two plants in Andhra Pradesh and Maharashtra will boost the cement sales from FY08 onwards.

The company has planned a capacity expansion of 20,000 tonnes in the high margin tissue paper segment in order to cater to the spiralling demand.

The divestment of non-operational paper plant in Brajrajnagar and possible sell off of its holdings in Century Textiles will result in a unlocking of value.