Stocks that Sharekhan says will be roaring success

Sharekhan has come out with its report on various companies result update.

Allahabad Bank : Allahabad Bank’s Q1FY2011 was characterised by strong NII growth, decline in NPAs and strong fee income growth. The bank targets to grow its advances by 25% in FY2012. Currently the stock trades at 1.4 FY2012 book value. We have a positive outlook on the stock and will release a detailed note shortly.

Axis Bank : Axis Bank delivered a strong earnings growth in Q1FY2012, though the core income was slightly below estimates due to a moderation in business and dip in margins. Nevertheless, the asset quality trends seem reasonable while fee income showed a strong pickup. We continue to maintain our estimate of a 22% CAGR growth in earnings over FY2011-13 contributed by 24.5% growth in advances. We maintain our BUY rating with a target price of Rs1,637 (3x FY2012 book value).

Union Bank of India : Union Bank’s Q1FY2012 results were marred by one off provision on account of revised provisioning norms leading to lower than estimated growth in earnings. We have trimmed our loan growth estimates as the bank has lowered guidance on business growth. Going forward, the slippages could moderate as the bank has migrated to system based NPA recognition (except for agri loans). We expect the bank’s earnings to grow at a CAGR of 21% over FY2011-13. We value the bank at 1.5x FY2012 book value, resulting in a target price of Rs375. We maintain our Buy recommendation on the stock.

FAG Bearings India : FAG is a debt-free company and has cash of Rs180 per share on books. We expect the company to report earnings per share (EPS) of Rs107 in CY2011 and Rs122 in CY2012. At Rs1,344 FAG trades at 11x one year forward earnings. The valuation is in the higher band and the stock has been re-rated due to the consistently high quality of its earnings. We have a positive long term view on the company.

See which stocks Mutual Funds/UTI have bought in last quarter?

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