Brokerages say `buy` but cuts price targets

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Brokerages say `buy` but cuts price targets

BS Reporter / Mumbai March 13, 2008

Most broking houses are giving a “buy” recommendation for key frontline stocks, but have reduced their price targets from a quarter ago after falling markets tempered expectations. The Bombay Stock Exchange’s (BSE) Sensex has declined by 4159.01 points or 20.5 per cent since January 1, 2008.

Macquarie has cut Reliance Industries (RIL) 12-month target price by 3.3 per cent to Rs 3110 a share in a March 5 report “to factor in the lower reserve estimates announced by Hardy Oil for KG-D9 and KG-D3 blocks, while maintaining that the stock remains the top pick within the oil and gas sector. India Infoline’s 12-month price target for RIL is Rs 3198 a share, an upside of 36.3 per cent.

The real estate sector has been battered in the market downturn after a slowdown in residential demand in select markets due to poor affordability, evident from a decline in property registrations and mortgages. Given the supply ramp-up, this glut is expected to spread.

TOP PICKINGS
Company	Recommendation	Revised price target	Brokerage
RIL	Buy	Rs 3110 a share	Macquarie
Suzlon Energy	Sell	Rs 241 a share	Citi group
ICICI Bank (from Rs1,654 earlier)	Buy	Rs1590 a share	Prabhudas Lilladher

Consequently, Deutsche Bank has upgraded DLF, at the same time, maintaining an “underweight” on the real estate sector, as a whole. The foreign broking house has also maintained a 12-month price target of Rs 875 a share.

However, there have also been a few downgrades. Citigroup downgraded Suzlon Energy to “sell” and also slashed the target price from Rs 396 a share to Rs 241 after a series of problems such as supply delays, tower shortages, negative forex movements, nacelle custom duty charges in the US and product liabilities.

In a January 7 report, the broking biggie had given a “buy” call on the engineering and construction company. In fact, Citi is underweight on utilities and overweight on telecom and consumers.

The banking sector has seen a series of revisions following the debt waiver announced by the finance minister in the presentation of Budget proposals.

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		Discussion Board / User Comments

March 13 , 2008 ,03:30 IST

A buy recommendation with a price cut is a bad sign. Brokerages should have a bit more courage and recommend to sell and hold cash. Or the alternative is to buy/ hold but for a time period of 5-7 years My Projections:- 1. 12000 levels for sensex very likely in 6 months. If recession, then 10,000 mark will be breached in 12 mths. 2 Interest rates will go down 3 Increments / bonuses / job change increments will come down. 4 Real estate prices - correct more than 30%.

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