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Summary
of Contents
STOCK UPDATE
Maruti Udyog
Cluster: Apple
Green
Recommendation: Buy
Price target:
Rs1,050
Current market price: Rs941
Exports to rise
Maruti Udyog Ltd
(MUL) has increased its investment outlay by Rs3,000 crore. It also
plans to launch a new small car by 2008. We view these developments
in positive light as the same reinforce Suzuki's focus on India and
its endeavour to make it an outsourcing hub. As a result, we
anticipate a surge in the company's exports in the coming
years.
Satyam Computer
Services
Cluster: Apple
Green
Recommendation: Buy
Price target: Rs900
Current
market price: Rs797
Growth on track
The management of
Satyam was quite confident of maintaining the strong growth momentum
shown in the past couple of years, due to the robust demand
environment, strong positioning in fast growing enterprise solution
business, incremental revenues from the large deals and tapping the
emerging opportunity in newer service offerings (like BPO,
infrastructure management and engineering services). The cost
pressures would continue but the management has levers to cushion
the impact on the overall profitability so that the margin
stabilises going forward.
At the current price the
stock trades at 19.4x FY2007 and 16x its FY2008 estimated earnings.
We maintain our Buy recommendation with price target of
Rs900.
NIIT
Technologies
Cluster: Ugly
Duckling
Recommendation: Buy
Price target:
Rs296
Current market price: Rs196
A joint venture with Adecco
NIIT
Technologies Ltd (NTL) has announced a joint venture with
Switzerland-based Adecco SA. The joint venture would be known as
Adecco-NIIT Private Ltd and will be based in India. It would have an
equity capital of $3 million with equal participation from both the
partners (ie 50% holding each).
Adecco is a Fortune 500
company with annual revenues of around 18 billion euros. It is a
global leader in human resource (HR) services that involves
providing flexible staffing and career resources to a large client
base across 70 countries globally.
MONSOON
WATCH
Monsoon
deficiency at 2%
With the sowing season at the fag
end, the overall crop situation looks satisfactory at this stage.
The rainfall for the season has improved considerably since the dry
spell witnessed in June. Some parts of Maharashtra and Gujarat
experienced floods, but the extent of damage to the crops is too
early to be ascertained. At this stage, however, the overall picture
points towards a normal kharif season.
MUTUAL
GAINS
Sharekhan's top equity fund
picks
We have
identified the best equity-oriented schemes available in the market
today based on the following parameters: the past performance as
indicated by the returns, the Sharpe ratio and Fama (net
selectivity).
The past performance is measured by the returns
generated by the scheme. Sharpe indicates risk-adjusted returns,
giving the returns earned in excess of the risk-free rate for each
unit of the risk taken.
FAMA
measures the returns generated through selectivity, ie the returns
generated because of the fund manager's ability to pick the right
stocks. A higher value of net selectivity is always preferred as it
reflects the stock picking ability of the fund
manager.
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