stocks to pick this week


CMP: Rs 1,707.10

Target price: Rs 2,100

Deutsche Bank has reiterated its buy rating on Bhel, while revising the price target to Rs 2,100. It feels the stock's recent correction is an opportunity for long-term investors, as it expects revenue growth to pick up over the next couple of quarters.

"A detailed analysis of all 40-odd projects being implemented by Bhel suggests that there is a likelihood of bunching up of new capacities for commissioning from 2QFY09 (Sep-08) onwards," the bank said in a client note.

"In addition, commissioning of 5000MW of short cycle industry and export orders – as well as Bhel's initiatives to boost its capacity – should drive up earnings in the medium term," it added.
Reliance Petroleum

CMP: Rs 168.75

Target price: 208

Enam Securities has rated Reliance Petroleum a neutral, with a price target of Rs 208 on belief the company is ready to capture buoyancy in the global refining cycle.

"We expect the refining cycle to remain robust though 2010-11 on the back of strong product demand from emerging economies, tightening capacity and stricter emission norms," the domestic investment bank said in a client note.

Enam expects talk of the company's merger with parent Reliance Industries to gain momentum, post Chevron stake sale. "Based on our price target of Rs 3,315/share for RIL, at a worst case scenario of 20:1 merger, RPL has a bottom at Rs 166/share," it said, while adding that any such merger is unlikely till there is a steep fall in GRMs.

Mcleod Russel

CMP: Rs 84.30

Target price: 120

Merrill Lynch has initiated coverage on Mcleod Russel India with a buy and price target of Rs 120 on expectations tea prices may strengthen further.

"We expect tea prices to rise 24% over FY08-10 following a production slump in Kenya in January-March 2008 and low pipeline stocks in India," the foreign investment bank said in a client note.

"We believe McLeod offers an excellent leverage given its scale and high fixed operating costs. We forecast McLeod's EPS (earnings per share) to grow 5 x (times) over FY08-10 on surge in tea prices," it added.

Merrill forecasts the company's EPS for 2007-08 at Rs 2.39, as against Rs 1.79 in 2006-07. In 2008-09, Mcleod's EPS is estimated at Rs 8.05 and at Rs 12.02 in 2009-10.

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