Are brokerages over optimistic?

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Are brokerages over optimistic?

On some stocks brokerages have been bullish with aggressive price targets, but current stock prices are lower than the point when they initiated coverage on them, reports CNBC-TV18. For eg. Crompton Greaves' is trading around Rs 390 and Sharekhan came with a price target of around Rs 464, when it was priced at Rs 400.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Jan-Mar to see bulk of fund flows There's more to buzz in Guj-based cos than Mr. Modi ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news Crompton Greaves | Global Offshore Services | HBL Power Systems | Maruti Suzuki India | Radha Madhav Corporation |

There are some stocks where brokerages have been bullish with aggressive price targets and in some cases, current stock prices are lower than the point when they initiated coverage on them, reports CNBC-TV18 Research Analyst Varinder Bansal.

One must have seen some of the highfliers today and these are from different sectors, but one thing that remains in most of the stocks is that in the past 7-10 days, these stocks have not been fairing very well compared to its peers, but in the last 2-3 days, the stocks have done well for itself.

Bansal explains, "For eg. Crompton Greaves ' stock is trading around Rs 390 and Sharekhan came with a price target of around Rs 464 and the most interesting thing is that at the price when this report came, it was Rs 400, so there are brokerages bullish on the stock and the price of initiation was much  higher than the price currently in the market today."

Lehman Brothers also came out with a report on Crompton Greaves with a price target of Rs 500. At the time of the report, the price of the stock was Rs 420, so even though there was a good rally in the market, the last two days saw a 1000-points rally. Still stocks are below the price initiation levels of some of the brokerages.

"Crompton Greaves has seen a very good move from the level of Rs 325-440 and it is a richly valued stock, but the stock has seen some profit booking from the levels of Rs 440 and now you are getting the stock around Rs 390," he continues.

Radha Madhav is another stock, which has popped up; the stock is around Rs 130 and the stock has been moving circuit to circuit, but the good point is Religare has come out with a report on the target price at Rs 200. Recently the company has issued warrants as well as some of the equity to KR Bharat at a price of Rs 85. So this would be one more stock to watch out for.

HBL Power Systems is a stock from the midcap space, but this stock has done extremely well and the stock is around Rs 420. Man Financial came up with a target of Rs 580 on this stock when the price of the stock was Rs 450.

Garware Offshore is another stock; the stock has not done well, but like some of the stocks are seeing follow up buying, there could be some buying seen in Garware Offshore. The price is around Rs 240 and Religare came up with a target mentioning the stock could go up to Rs 360. When the report was out the price was around Rs 268, so again today's price is well below the initiation level.

Bharat Seats is another stock, which has been seeing very good movement and the stock has gained from Rs 14 to Rs 33 and from Rs 33 level, the stock has seen some profit booking coming in and is trading around Rs 27-28 levels.

Maruti and Suzuki Motors holds 14.8% stake each in the company and FY07 EPS of the company is around Rs 9. In the last 4-5 years, the company has been making an EPS of around Rs 9-10, so one is getting the stock, where Maruti and Suzuki controls around 14.8% stake each, at around 3-4 multiples.

These are some of the stocks, which look good on the price perspective and on the brokerage bullishness.