Institutional Activity Comes After Wise To Be Risk Averse

* In an update after the announcement of third quarter results, CLSA India Research reiterated a buy recommendation on Asian Paints at Rs 270 with a target price of Rs 320. The company's initiatives on improvement in sourcing and better working capital management with focus on conserving capital leaves a lot of scope for further improvement in margins. At 12.7x its estimated FY03 earnings, the company is trading at lower end of the valuation range among the universe of consumer companies in India.

* CLSA is pessimistic about the prospects of Colgate-Palmolive India at Rs 150. Despite a growth in the overall oral care market, the company's topline shrunk by 2.1 per cent due to the decline in market share by 260 basis points to 46.7 per cent. Going forward, there is limited scope of improvement in margins or earnings due to intense competition and continual higher advertisement and promotional expenses.

 

* Morgan Stanley recommends a shift to Satyam computers from Hughes Software Systems(HSS) at Rs 330. Both the stocks are trading at a similar price-earning ratio of 20x their estimated FY02 earnings.

HSS has lowered its guidance further for FY02 to a revenue growth of 17-19 per cent compared to 25-30 per cent earlier. Besides, its earnings visibility for the next quarter is less not comforting. On the contrary, Satyam has a better business model and is growing at a rate of over 30 per cent.

* UTI Securities has found a kicker in Fortune Informatics at Rs 37 with a 12 month price target of over Rs 100. The company, involved in document management systems and related products, has recently tied up with some of the leading imaging companies such as Ricoh Asia-Pacific and others, for bundling its products with their solutions.

It intends to directly target big clients like banks, insurance and other diversified companies. The company has a very small cost base and substantial increase in volumes will be directly add to its bottomline.