Buy Ceat, ITC; Sell NCC, Suzlon: Sharmila Joshi

Buy Ceat with a target of Rs 123.50 and a stop loss at Rs 119.50. Tyre stocks have been doing well off lately. Largely because of the fact that we have seen a correction in rubber prices internationally. So prices have come down all the way from about Rs 240 levels in April 2011 to about Rs 169 currently. Inspite of the kind of sluggish demand that we have been seeing in the industry or the fact that rupee has depreciated; this clearly means better margins for tyre companies.

Buy ITC with a target of Rs 269.50 and a stop loss at Rs 263. We have seen HUL etc make new 52 week highs and I think ITC will follow suit. It is playing a bit of a catch up largely because there was some negative news flow about its advertisement etc overseas that hit the stock. But we have heard from the management and they have said that they will increase prices in their non-cigarette business in the FMCG side of the non-cigarette business.

Sell NCC with a target of Rs 34 and a stop loss at Rs 35.25. We have a stock here which has a fairly high level of debt and the expectation is that in this year, they will be able to monetize some of their assets, sell road projects etc and raise money to bring down this debt but given the market conditions that we have currently; this does seem to be an upheld task.

Sell Suzlon with a target of Rs 14.75 and a stop loss at Rs 15.50. Rs 14.75 does indicate a new 52-week low for Suzlon. I think this is very likely given the fact that once again as in the case of NCC I think the going is going to be very tough for companies that need to reduce debt. We have heard from Suzlon that they would be reducing work force also to kind of restructure debt etc.