15 stocks you can buy - Kotak

In last few days stock trades & volumes have picked up substantially in the market, institutional investors are buying stocks has started, foreign institutional investors (FIIs) have bought 1,600 crore in the last five days.

Kotak Institutional Equities team has put out a list of top 15 stocks to buy now for 2009 - 2010, which are not penny stocks but are reasonably large cap names and stock buying in these counters can give returns of 50-100% over the next 18 months.

Most analysts believe that domestic participation has picked up quite significantly and so people may trade back into the market as there are lots of values and accumulate stocks.

Following are Sanjeev Prasad, ED, Kotak Institutional Equities' fabulous 15 picks

Punjab National Bank (PNB): Valuations are attractive and gross non-performing loans (NPLs) are seen at 5% for FY11

HDFC Bank: It is a large cap stock with attractive valuations

Axis Bank: Valuations are cheaper than that of HDFC Bank and see high return on equity (ROE)

United Phosphorous: See fair value of the company and in a year�s time it would be Rs140-150 per share

Crompton Greaves: See seven times prcie to earnings (PE) on 2010 numbers. It is a pretty good buy, despite whatever has happened on the investment in the power

India Infoline: The brokerage stock will see upside in market volumes

Tata Steel: See FY10 earnings per share (EPS) at Rs 55

Indiabulls Real Estate: The occupancy levels in the properties are going higher and there will be a re-rating of the stock to some extent.

Reliance Infrastructure: See clarity in Q4 on the usage of cash available with the company

JP Associates: The company will benefit from higher cash flows from its cement business

Biocon: Although valuations are cheap and the stock has fallen a bit, but by 2010 things will start improving.

Warren Buffet's Advice for 2009

BHEL - A good long term story

Bharat Heavy Electricals (Bhel), the country’s largest power equipment manufacturer, managed to buck the slowdown but surely the flat bottomline is a pointer to some effect surely playing on the performance of the company. Compared to the superlative growth shown by L&T in Q3FY09, that of BHEL has been more subdued.It posted a meager 2% increase in net profit at Rs.791 crore while net sales rose 21% at Rs 6,022 crore. Despite costs coming down, the cost incurred in raw materials remains a concern. Its consumption of raw materials amounted to Rs 4,059 crore, which was 67% of net sales as against 57% in Q3FY08.Orders worth Rs.15200 crore were received during Q3FY09. The order outstanding was at about Rs.113500 crore. Every other day, we see that BHEL has received an order and most of the time, almost all the orders are big ticket orders. This, to a large extent is reassuring as it means the company is showing no signs of a slowdown. It has enough orders to keep it busy and the cash registers ringing for the current fiscal.Now the big question – L&T or BHEL? Both are blue chips and a must in any valuable portfolio. Right now, in this scenario of slowdown, BHEL has a march over L&T on two counts – firstly, over 60% of the orders of L&T comes from the private sector and hence it could face some slowdown if the companies decide to cut down on their capex or postpone it for later. For BHEL the order backlog is huge and for BHEL, it’s a question of how and when to complete rather than what to complete. L&T has been cautious when it announced 30% guidance for FY09 and its current takeover bid of Satyam is also causing some jitters. Mind you, L&T also remains a great buy. Advice :Every dip, use it for accumulating BHEL for the long term.

Buy - Nestle India Ltd - Good Long Term Story

Nestle India Ltd - Buy

CMP - 1,444

52 week H/L - 1880 / 1220

Summary -

Nestle India Limited engages in the manufacture and sale of nutritious food products in India. The company’s products primarily comprise milk products, such as sweetened condensed milk, baby milk foods, milk powders, acidified infant food, and other milk products. It also offers beverages, prepared dishes and cooking aids, and chocolates and confectionery under various brand names, such as KitKat, Friskies, NESCAFE, Maggi, Nestle, Dreyer’s, DogChow, and NESTEA. The company is headquartered in Gurgaon, India. Nestlé India Limited operates as a subsidiary of Nestle S.A.

Result analysis -

Nestlay India has decalred its fourth quarter results. The company's Q4 net profit was up 29.1% at Rs 534 crore.

Its net sales were up 23.4% at Rs 432.4 crore.(A good result during recession time)

Growth -

Nestle India is best placed to ride on the expected growth in processed food market due to the strong technology of the parent company. Dominant market share and strong brands will prevent margin erosion of the company. Going ahead, high penetration and innovative prod-uct launches would further fuel its growth.

Positive Factors -

Good financials/results.

A divident paying stock (paid 25.50 Rs per share last yr)

Good market demand & growth potential.