Stock Recommendations

Stock in Focus 

Hindalco closed 6% higher, outperforming the CNX Metal index by ~5%. 

We are positive on the company as domestically it is one of the largest manufacturers of primary aluminum, with an installed capacity of 1.28mn tonnes. In the current coal auction, the company has managed to secure four coal blocks, thus providing long-term raw material security. 

With the ramp up of the new smelters, we expect domestic volumes to grow at a CAGR of 25% over FY14-FY17E. Novelis its US subsidiary with an estimated share of ~15% of the world’s supply, is shifting focus to the faster growing automotive segment and higher recycling content and we expect shipments to increase. 

We expect Hindalco’s PAT to grow at a CAGR of 21% over FY14-FY17E. At the CMP, the stock trades at 6.3x FY17E EV/EBITDA and 6.4x P/E. 

We recommend a BUY on the stock with a Target Price of Rs186.

INTRADAY PICKS

GLENMARK (LTP: 808) SELL For today's trade, short position can be initiated only in Rs.825-830 range for target of Rs.790 with a strict stop loss of Rs.840. 

IOC (LTP: 347) BUY For today's trade, long position can be initiated only in Rs.340-337 range for target of Rs.352 with a strict stop loss of Rs.334. 

Buy BHEL between 259 to 262, Target 271, Stop Loss 255 

Buy REDINGTON between 132 to 134, Target 139, Stop Loss 130 

Positional Stock Recommendation 

Bharti Airtel lost 3.4% in last two trading sessions, as it is facing stiff hurdle from the upward slopping trend line. 

We believe stock will remain in pressure till the time it trades below the trend line, as it had visited lower level of Rs340 post visiting that line. Fall in weekly RSI (14,9) is also signaling near-term weakness in the stock.

Thus, for today's trade, short position can be initiated only in Rs.395-405 for target of Rs.360-340 with a strict stop loss above Rs.415.