Actionable ideas

Nagarjuna Fertilizers (NFCL) (BUY, CMP Rs54 Target Rs68)
NFCL is enhancing its capacity to 1.7mn ton from 1.2mn ton by FY09. The company has its manufacturing plant located at Kakinada (Andhra Pradesh), which is close to KG basin, where recently Reliance Industries struck abundant gas reserve. Natural gas being the major raw material, its availability from KG basin at cheaper rates will prove cost effective for the
company. With the government acting as a price regulator, Urea prices in the domestic market are cheaper when compared with the global price standard. Any announcement in budget towards free pricing of urea at the incremental capacity and additional subsidy towards the industry is likely to boost the profitability of the company. We recommend a short term buy on the stock with a price target of Rs68
Educomp Solutions (BUY, CMP Rs4,331, Target Rs4,850)
With Union Budget round the corner, we expect finance minister to emphasize on Education again. In the 11th year plan, government announced Rs387bn capex programme for ICT schools and Rs84bn for Edusat to improve the computer penetration in Indian schools from current ~12%. In addition, the planning commission has also proposed to allocate Rs310bn for national skills development programme. This provides companies like Educomp opportunities to tap huge market of more than 200,000 secondary government schools in India. Educomp being the market leader in smart classes and ICT solutions is likely to be one of the key beneficiaries from any positive announcement by the government in the upcoming budget on education sector. Based on above rationale, we recommend a short term buy on the stock with a price target of Rs4,850.
Other stocks to watch out for: Punj Lloyd, IRB Infrastructures and Nava Bharat Ventures.