Short & Medium Term Stocks Recommendations

STOCK IN FOCUS

Shriram Transport Finance closed 0.8% higher in a weak market. We expect the company to be in good stead going forward led by pickup in CV demand along with improving operating dynamics for the CV finance industry.  Within CV finance segment, second hand vehicle finance is witnessing higher growth, which augurs well for Shriram Transport. 

The company witnessed healthy growth in disbursement in 3QFY15 (+39.4% yoy; +10.3% qoq) led by improvement in pre-owned CV demand.  Further, drop in the funding costs will help the company to post healthy growth in operating income. We expect PAT to grow at a CAGR of 17.6% over FY14-FY17E. 

We expect its valuation to move towards its historical average of 2.5x forward P/ABV. 

At current levels the stock is trading at 2.5x FY16E and 2.2x FY17E Adjusted P/BV. We have a Buy on the stock with a Target Price of Rs.1,327

INTRADAY PICKS

IDFC (LTP: 167) BUY For today's trade, long position can be initiated only in Rs.167-165 range for target of Rs.180 with a strict stop loss of Rs.164. 

HINDALCO (LTP: 132) BUY For today's trade, long position can be initiated only in Rs.129-126 range for target of Rs.137 with a strict stop loss of Rs.125. 

Positional Stock Recommendations 

Wipro closed Friday's trade on a strong note with an above average volume as it advanced close to 3%. The recent correction in the stock price has helped stock to move into the oversold zone and also to revert to its short term averages that remains a good support zone for the stock. 

We believe the recent correction on the stock price should be used to accumulate the stock on dips for a good upside in short to medium term. Stock continues to have multiple supports between level of Rs.640 to 630.

On upside, stock faces minor resistance around Rs.675 above which we may see stock moving towards Rs.725.

Thus, for today's trade, long position can be initiated only in Rs.635-625 range for target of Rs.675 and then 725 with a stop loss of Rs.600.