Motilal Oswal Securities preferred Diwali pick

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Motilal Oswal Securities preferred Diwali picks for next year are

-          Bharti Airtel

-          Hero Moto Corp

-          HCL Tech.

Bharti Airtel Ltd:

We expect Bharti to be key beneficiary of recent tariff hike taking by telecom companies and reduced competition intensity in telecom space. We expect Bharti to deliver 25% proforma EBITDA CAGR over FY11-13. The stock trades at EV/EBITDA of 7.4x FY12E and 5.6x FY13E, we reiterate buy have price target of INR530.

Hero Moto Corp Ltd:

Hero Motor Corp has consistently delivered higher sales volume and coupled with fall in raw material cost would lead to higher profitability. Hero Motor has reported 20% volume growth in 1st half of FY12 margins have improved by 50bps. Our EPS estimates for FY12 to Rs. 121.10 and for FY13 to Rs. 150.50.Maintain buy with target of Rs. 2,408.

HCL Tech: - 

HCL Tech has strong deal pipeline also not seeing any budget cuts for CY12 and expects IT budgets to remain flat. This should help drive stronger growth in 2012. Also, HCL Tech has seen strong additions across revenue buckets indicating good client mining. The stock trades at 13.4x FY12E and 11.7x FY13E EPS. Our TP of INR516 discounts FY13E EPS of INR34.4 by 15x. Maintain Buy