Actionable ideas

Actionable ideas

Sterlite Industries (BUY, CMP Rs734, Target Rs851)

The company has lined up investments to the tune of Rs200bn by FY10 to establish itself as one of the largest aluminumand zinc producer in the world. The company also plans to foray into power generation and is planning to list its powersubsidiary. Recently, the stock has fallen sharply in the ensuing market correction from the high of Rs1,150 in the firstweek of December 2007. Since than, the stock has found support around Rs695 levels and has moved in a narrow range.However, the stock broke out fro m this short term consolidation pattern on Wednesday, indicating an uptrend from thecurrent levels. Based on above rationale, we recommend short term traders to buy the stock with a price target of Rs851.

Jaiprakash Associates (BUY, CMPRs263, Target Rs345)

The JPA stock fell sharply yesterday due to a miscommunication by the company management at an investor meetregarding holding in its subsidiary JP Infratech. Huge quantities were offloaded, including a couple of FIIs. Themanagement clarified the matter by stating that JP Infratech continues to be a 100% subsidiary of JPA on television andvia a letter to analysts. With investors still seeking details on the issue, the stock did not recover in yesterday’s session.We believe that the poor sentiment will soon fade away and large players will return to this counter. The stock has nearlyhalved in the last 2-3 months and available at attractive valuations. The company is a play on multiple themes:construction, power, real estate, and cement with a healthy order book. Holding in JP Infratech and power assets willunlock value in future. Investors buying with a 1-year perspective can expect to make multibagger returns from currentlevels.