Technicals: Power Sector

CESC has been witnessing a falling wedge pattern and if the stock rallies above 310 levels where it will fill the gap formed during the downtrend, we expect the stock to witness a smart rally. RSI also for CESC is oversold and once the stock rallies above 310 levels, the RSI will start to move orthward indicating a bullish pattern. We recommend to buy CESC at current levels, with a stop loss of 250 and an initial target of 350 and the second target being 400.

NTPC has taken support of the major trend line and shown a spurt from there. A breakout above 188 levels will indicate a bullish pattern in the stock. RSI is also showing an upward movement from the bottom levels also indicating positive movement for the stock. We recommend to buy NTPC at current levels, where the stock will cross the support line, with a stop loss of 160 and an initial target of 205 following a target of 220.

After making double top formation at around 1100 levels, the stock has corrected up to 700 levels. The downward price gap is seen on weekly chart and the gap has to be filled for resuming its uptrend. After crossing 950 level, the price gap on weekly chart will get filled and the 'Hammer' structure seen on chart is expected to support downtrend, if seen. RSI for REL INFRA is in the oversold territory and an upward movement of the same indicates a positive move northwards for the stock. We recommend to buy REL INFRA at current levels, which is the level where the gap will be filled, with a stop loss of 780, which is the level near the previous low made by the stock and a targets of 1150 and 1350.

Source: MOST.

Stock Ideas: Mercator Lines, Rohit Ferro Tech, UTV Software

Religare Research has recommended a buy rating on Mercator Lines with a target price of Rs 160 in its June 16, 2008 research report. "On an expansion spree – fleet size doubled over last two years to 29 vessels with firm plans to ramp up to 33 vessels by December 2010. Also, an oil drilling jack up rig, scheduled for delivery in Q1FY09, has already been contracted for 3 years.Augmented fleet amid favourable day rate conditions to drive revenue and margins. Revenues expected to log 22.3% CAGR over FY08-FY10, with earnings CAGR of 28.6% and ROE of 30%."
"Attractively priced at P/E of 4.9x and P/BV of 1.1x on FY10E. Our valuation of Rs 160 is based on 1.2x current NAV. At our target price, the stock would trade at a P/E of 6.9x and P/BV of 1.6x, which is reasonable given the expanded fleet and strong earnings growth," says Religare's research report.

Religare Research has recommended a buy rating on Rohit Ferro Tech with a target price of Rs 216 in its June 16, 2008 research report. "Riding high on the ferro alloy super cycle, as a severe ferro chrome supply crunch in the world market has escalated prices of this metal to unprecedented levels. Rohit Ferro is thus witnessing a sharp increase in profit per tonne.Timely expansion coupled with increasing feedstock linkages would further bolster growth."
"Acquisition of an operational coal mine in Indonesia (60% economic interest in thermal coal reserve of 20mn tonnes and coking coal reserve of 5 mn tonnes) and arrangements with a chrome ore mine in Iran would provide substantial raw material links. Coal mine would meet input requirements of a 110MW captive power plant coming up by FY10, besides generating revenues from sale of coal in the open market. Business valued at Rs 216 using an average of 5.5x P/E and 5x EV/EBITDA on FY10E, based on industry average multiples," says Religare's research report.

Religare Research has recommended a buy rating on UTV Software Communications with a target price of Rs 1068 in its June 16, 2008 research report."Media industry valued at Rs 513 billion and expected to log an 18% CAGR over the next five years, with films growing at 13%, television at 22% and animation & gaming at 25% (CAGR). UTV is a vast media conglomerate with strong business verticals and ample funding to ride on the opportunities in the sector. Fund infusion of Rs 13bn through recently concluded deals with Disney and the increased promoter group stake would anchor the company’s growth. UTV set to register a CAGR of 86% in revenue and 80% in PAT over FY08-FY10. Film business projected to grow at 47%, television at 40% and gaming at 140% CAGR."
"We have an SOTP-based target price of Rs 1068. At its peak, the stock traded at 23.7x FY10E earnings, while valuations are now at 16.2x – a significant discount to its previous high," says Religare's research report