Recomended stocks for buying on monday (21/03/11)

Here are some stock which is recomended to buy -

Allahabad Bank

Current market price: Rs 199

Target price: Rs 250

Upside: 25.62%

The bank`s CASA mix which stands at a healthy 33.3%, will help bank to get better margins than peers in the current rising rate scenario. The NIM`s for the Q3FY11 stood higher at 3.4%. The bank`s asset quality is comfortable with gross and net NPAs at 1.8% and 0.6% respectively. Moreover slippage rate remain under control at 1.4% (annualized) for FY11. Its C/I ratio, which reflects the operating efficiency of the bank, is 39.7%, one of the lowest among the peers. The savings on account of lower provisions requirement on account of lower slippages and improvement in cost structure will help maintain the RoAs at 1.2%, while RoE`s likely to be healthy at 23% for FY11-12. At the CMP, the stock is quoting at 1.3x FY11E ABV and 1.1x FY12E ABV with a likely average RoE of 23% over FY11-12E.

Tata Motors

Current market price: Rs 1,144

Target price: Rs 1,520

Upside: 32.86%

That the demand outlook remains strong across segments. They expect 10% to 15% growth in M&HCV trucks (their est is 9%), <10% growth in buses and 20% volume growth in LCVs in FY12. LR continues to drive profits at JLR. However, Jaguar has also started contributing to profits. Profitability will improve with higher share of new models in sales. Benefits of low hanging fruits almost exploited at JLR but there are adequate levers both short term and long term that should provide cushion to margins. They prefer DVR as it is at steep disc. of 45% to ordinary shares, trades at 1.3x FY12 P/B offers 4.8% div. yield (FY11E).

IVRCL Infrastructure (IVRCL)

Current market price: Rs 73

Target price: Rs 126

Upside: 72.60%

IVRCL Infrastructure (IVRCL) has bagged orders aggregating to Rs 5,646 million in its power, buildings and transportation divisions. In recent times, order inflow has been at a stand still for the sector as a whole and is a big concern for the sector`s growth. But they believe that IVRCL is one of few companies that have a very strong order backlog; slowdown for few months should not impact the company`s growth. Therefore, they are optimistic over the growth prospects of the company. They have valued IVRCL on an SOTP basis. The company`s core construction business is valued at P/E of 11x FY2012E EPS of Rs 8.4 (Rs 92 per share), whereas its stake in subsidiaries, IVR Prime (Rs 24 per share) and Hindustan Dorr-Oliver (Rs 10 per share), has been valued on mcap basis, post assigning a 20% holding company discount.

At the CMP of Rs 73, the stock is trading at P/E of 8.7x FY2012E EPS and 0.9x FY2012E P/BV on a standalone basis and adjusting for its subsidiaries at P/E of 4.6x FY2012E EPS and 0.5x FY2012E P/BV, which they believe is at attractive valuations. Therefore, on the back of the company`s excellent execution track record, robust order book-to-sales ratio and attractive valuations, they maintain buy on the stock with a target price of Rs 126.

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