Ok, so was doing a quick review on various stocks and here is how they look –

Auto sector

1.       MUL (33%) FV 1600 – play on base effect, reasonable valuations at exit multiple of 15x. Headwinds can be currency. Tailwind of RM can play.

2.       Hero Motorcorp – Story largely done and dusted, will be mkt performer with 11% upside

3.       Bajaj Auto – 18% upside for FV of 1900. Can give it 15x exit multiple. Lot of new launches in FY13, export presence hedges it for weaker currency & KTM is the icing.

4.       Ashok Leyland – valuation wise has good upside but cautious w.r.t. to the CV cycle, though on the ground offtake happening. Div yield is the sweetener.

5.       Exide – Will languish at these levels for a couple of quarters but structurally sound

6.       M&M and TTMT – no specific triggers, could see a 15% upside purely on valuation terms

Cap Goods

1.       Only LT seems to be comfortable for FV 1600, a good upside but need to be invested. Headwind of order inflow. But aggressive guidance given by mgt of 15-20% inflow growth which may come in, as FY12 slippages will count plus it is L1 in some bids. E&C has been doing well as a vertical. More insulated than BHEL.

Banks

1.       PNB – not getting comfort on restructured book though looks comfortable in valuations

2.       BoB – only PSU I like. FV 930 on 1.3x BV FY13E. Upside of 27%. Has had some slippages but conservative management and more than adequate cover gives us comfort. Growth in book also better than other PSUs

3.       Axis – Riskier bet due to chunky book. But an upside of 24% from here on 1.5x book. FV 1300.

4.       ICICI Bank – Largest upside amongst pvt banks nearly 47% for FV of 1200 – 2x book. Seasoned NPA profile should hold it in good stead.

5.       HDFC Bank – the king of banks still has about 20% long term upside if we are willing to give it a 4x P/BV multiple for FV of 600

FMCG

1.       Asian Paints, Nestle, Colgate and Unilever all have fantastic growth and business models but little room for upside given the valuations

2.       ITC looks good for another 10% from here given the recent GOI ruling which may enable it to maintain margins on price hikes. (Ad valorem duty scrapped for fixed duty). FV250

3.       Dabur looks good and is putting its distribution strategy in place with its ayurvedic portfolio. FV 120 should give us 14% upside

IT

1.       HCL has the biggest upside, decent numbers, capitalizing on vendor churn. 15x multiple may be a little too soon for this company but on that we get a FV of 570 – 18% upside.

2.       TCS really rich valuations, no buy at 18x multiples, marginal upside at 20x. Difficult to assign in that in current times, but investors have little option with INFY underperforming.

3.       INFY looks good only from a 24 month perspective else valuations do not support.

Power

1.       NTPC – I see a 20% upside based on valuations. Can give it exit P/BV multiple of 1.5x for FV of 175. Stock got beaten down due to lesser PLF thanks to lack of coal availability. That should improve in FY13. As regards capacity expansion, atleast should put in 3GW for FY13.

Oil & Gas

1.       HP/BP become situational plays for price hikes. Cairn is perfectly prices in. ONGC is a function of government subsidy nowadays.

2.       RIL – it’s a technical issue. Will not revive till positive news flows in on KGD6. Buyback offer may not stem the slide. However, may get reversal on recent fine imposed by GOI.