Stock Brokerake Recos: Sell REL, Buy TCS, Buy UCO Bank

REL
CMP: Rs 1,087.45
Target Price: Rs 510

Citigroup has rated Reliance Energy (REL) a ‘sell’, with a price
target of Rs 510 as it feels that the current price ignores
execution risks involved in the company’s proposed projects.

“REL shares have rallied up 118% over the past five months on
expectations of blue-sky scenario through capacity additions, EPC
(engineering, procurement and construction) order wins and the
value of CBM (coalbed methane) blocks,” the investment bank said
in a note to clients.

“At Rs 1,106.50, the implicit value of net cash/share is 3.5
times book value, which in our view completely ignores execution
risks,” the note added.

Redington
CMP: Rs 309.90
Target Price: Rs 440

Kotak Securities’ private client group has initiated coverage on
Redington with a ‘buy’ and a 12-month price target of Rs 440,
citing positive growth prospects as a key reason. “We expect the
company to achieve an EPS (earnings per share) of Rs 17.8 in
FY08E (estimates) and Rs 25.2 in FY09E,” the retail brokerage
said in a note to clients. “Redington is looking to expand
aggressively in other African markets and has already identified
CIS and Vietnam as next potential geographies,” it added.

Peninsula Land
CMP: Rs 560.15
Target Price: NA

ICICI Securities has maintained its ‘buy’ rating on Peninsula
Land while upgrading its net asset value (NAV) estimates.
“We are upgrading Peninsula Land’s (PLL) NAV estimates 23% to Rs
34.5 billion or Rs 732/share from Rs 28 billion or Rs 596/share
primarily due to an increase in FSI (floor space index) of the
Dawn Mill property from one to two, implying a rise in saleable
area from 0.6 million sq ft to 1.2 million sq ft, leading to Rs
98/share upside,” the domestic brokerage said in a note.

“We have also increased the value of PLL’s special economic zone
(SEZ) and township projects after further clarity on prices,
execution timelines and payment of land costs,” the note added.

TCS
CMP: Rs 1,002.15
Target Price: Rs 1,233

IDBI Capital Markets has initiated coverage on TCS with a ‘buy’
and 6 to 12-month price target of Rs 1,233 on positive growth
outlook. “We argue that a robust demand environment, healthy
pipeline, significant employee additions and persistent large
deal wins should help the company sustain a 26% revenue CAGR
(compounded annual growth rate) for FY07-10E (estimates),” the
local brokerage said in a note to clients. IDBI Cap estimates the
software major’s 2007-08 earnings per share (EPS) at Rs 54
against Rs 42 reported in 2006-07. In 2008-09, its EPS is
expected at Rs 66.

UCO Bank
CMP: Rs 45.90
Target Price: Rs 55

ALMONDZ Research has rated UCO Bank a ‘buy’, with a price target
of Rs 55, citing positives emanating from its capital
restructuring exercise as one of the key reasons. “Capital
restructuring exercise would improve UCO Bank’s shareholders’
value as their earnings per share would increase significantly
with the reduction in equity base,” the domestic brokerage said.
“The government holds 75% in UCO Bank leaving enough room for a
follow-on public offer in the future for financing its future
growth plans,” it added.