Post market crash, Sharekhan bets on 6 safe stocks

Sharekhan has come out with its report on various stocks.

IDBI Bank: The bank continues its strategy to pursue slower advances growth and focus on the credit quality, CASA growth, retail deposits etc. While slippages continue to be a cause of concern, the core performance seems to be on an improving trend as reflected by steady margins. We estimate earnings to grow at a CAGR of 20% over FY2011-13 contributed by 14% growth in advances. We maintain Buy with a target price of Rs182 (1x FY2013 book value and Rs20 for investments).

Grasim Industries: We continue to prefer Grasim as our top pick among the large cement players due to its strong balance sheet, comfortable debt-equity ratio (0.36x FY2011), attractive valuation and diversified business. We estimate the consolidated earnings of the company would grow at a compounded annual growth rate (CAGR) of over 19% during FY2011-13. On the valuation front, we continue to value the stock using the sumof- the-parts (SOTP) valuation methodology and revise our price target to Rs2,630. We maintain our Buy recommendation on the stock. At the current market price the stock trades at a price/earnings ratio of 6.8x discounting its FY2013 estimated EPS.

Pratibha Industries: To factor in the higher interest burden, we have lowered our earnings estimates for FY2012 and FY2013 by 6% and 12% respectively while maintaining the same at the operating level. We continue to like the company given its presence in the high-margin water segment, its backward integration into pipe manufacturing and better than industry OPM. The recent large order wins with a better margin reinforce our confidence in the company. However, in the current tight liquidity scenario, we expect its interest burden to continue and we have factored the same in our estimates. The stock currently trades at 6.6x and 5.3x its FY2012E and FY2013E earnings respectively and offers a good upside from the current levels. Hence we maintain our Buy recommendation on the stock with a revised price target of Rs61.

United Phosphorus: To factor in the increase in the higher working capital requirement, the inorganic growth from the recent acquisition and the revised higher revenue guidance from management, we have revised our FY2012 and FY2013 estimates. The revised EPS estimates for FY2012 and FY2013 stand at Rs17.5 and Rs21.3 respectively. At the current market price the stock trades at 9.5x FY2012 and 7.8x FY2013 estimated earnings. We maintain our

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