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Hot Chips - Stock recommendations for your portfolio

| 12/30/2011 5:17 PM Friday

HCL TECHNOLOGIES | BSE Code: 532281 | Volume: 43000 | CMP: Rs391

IT major HCL Technologies has the capability of winning new projects due to its strength in the IMS and package implementation segments, which it has achieved through the acquisition of AXON, particularly when project restructuring deals are growing faster. The company is focussed on developing capabilities in Enterprise Mobility, Cloud Computing and Analytics to complement its existing offerings, and is looking for acquisitions for the same. It has the potential to improve its margins on the back of an improving employee pyramid and scale efficiencies. The out performance in emerging verticals such as Energy, Utilities and Retail may result in higher EBITDA margins in the near term. There has been some support to the EBITDA margins from improvement in the employee pyramid (the last four-five quarters have seen huge lateral addition, which is likely to be subdued going forward). Also, the absence of forex losses is a positive for the bottomline. Its relatively cheaper valuations as compared to other large firms is a factor that goes in favour of the stock. Investors can look at the stock from a medium-term perspective.

JAGRAN PRAKASHAN | BSE Code: 532705 | Volume: 658 | CMP: Rs93

Jagran Prakashan, with its leadership in the UP market, is well poised to benefit from the steady growth in the print media sector. Its well-entrenched position in growing regions such as Bihar and Jharkhand, as well as the phased and planned expansion into new media businesses is also likely to show better revenue visibility going forward. Its wide portfolio (including Mid Day, I-next and City Plus) is also placed well. The company has a well-balanced business model, with more than 30 per cent revenues from circulation and other media businesses. Coupled with this, its growth strategy to further increase penetration (in terms of circulation in its current market) and the monetisation of its readership insulates it from a slowdown in advertisements in the current macro-economic scenario. The momentum in advertising revenue is likely to be led by government spends (UP elections in Q4) and broad-based growth across other new media businesses. One can look at the stock from a medium-term perspective

Disclaimer: The scrips in this column have been recommended with a short-term investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations


 

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