Go long on Mahindra Satyam, Shriram Transport: Kapur

In CNBC-TV18's popular show Bull's Eye, Ashish Kapur of Invest Shoppe India shares his trading strategies for the day.

One may go long in Mahindra Satyam with a target of Rs 125 and a stop loss at Rs 113. IT remains a preferred sector to hunt for stocks in this uncertain market and within the IT space we quite like Mahindra Satyam. The company has reported fairly encouraging numbers in the previous quarter. The deal size is increasing and they are adding lot of new clients. Also the impending merger with Tech Mahindra is likely to improve the overall rating of the combined entity. The size will also help them get on large deals with larger and better reputed clients.
One may go long in South Indian Bank with a target of Rs 22.50 and a stop loss at Rs 20.10. South Indian Bank in our opinion is one of the best picks in the private sector banking space. The bank enjoys very healthy return ratios, has a very good cash flow and remains a prime takeover target whenever any big player wants to takeover a private sector bank here. The company is growing at a very good space, over 20 percent compound annual growth rate (CAGR) growth, has very nice quality of assets and good return ratios.
One may go long on Aurobindo Pharma with a target of Rs 190 and a stop loss at Rs 172. Pharma is another sector which we are quite bullish on and within that space Aurobindo is a stock which is doing fairly well. The company reported very encouraging numbers in the previous quarter. Also with commencement of operations at its Hyderabad Special Economic Zone (SEZ) volumes are likely to improve going further. The management has also guided for a 200-300 bps increase in its margins and there are about 70-80 new launches lined up for the next few quarters. Given all that we are quite bullish on this stock.
One may go long on Shriram Transport Finance with a target of Rs 730 and a stop loss at Rs 655. Over the years Shriram Transport Finance has established a very strong presence especially in the truck financing segment and it is a clear leader in the pre-owned truck financing business. The company reported decent numbers in the previous quarter with a good traction in overall volume. Though margins did come under pressure, but we feel going ahead the volume growth especially with their focus on rural areas would help it overcome the margin pressure.