Stock recommendations- Ashok Leyland and Oil India

Ashok Leyland

Ashok Leyland is a major company in the Indian commercial vehicle segment. Ashok Leyland has seven manufacturing plants with a space of 650000 square meters. Company reported a sales turnover of near Rs 2500 Cr in the first quarter FY 2012. Its sales turn over in the first quarter FY 2011 was near Rs 2300 Cr. It reported a net profit of near Rs 86 Cr in the first quarter FY 2012.  Its net profit in the first quarter FY 2011 was near Rs 120 Cr. It was really shocking news for the company. Big decline can be seen in the net profit.

The market cap of the company is near Rs 6700 Cr. Book value is Rs 9.99. Price/Book ratio is 2.54. P/E stands at 11. It is clearly below the industry P/E of 28. Company reported annual sales of near Rs 11000 Cr in the FY 2011. Company is available half of its annual sales. This is one of the undervalued stocks in the basket.  The stock is expected to be a dark horse in the coming months. It will be brilliant investment decision. Company can go to the levels of Rs 30 in a medium term.

Oil India

Oil India is a reputed company from Indian Oil and Exploration Sector. They have PEL/ML area of 1 lakhs Square Kilo Meters for exploration and production activities. Company reported a sales turnover of near Rs 2300 Cr in the first quarter FY 2012. Its sales turn over in the first quarter FY 2011 was near Rs 1600 Cr. 50% gain can be seen in the sales turn over. It reported a net profit of near Rs 850 Cr in the first quarter FY 2012. Its net profit in the first quarter FY 2011 was near Rs 500 Cr. About 60% growth can be seen in the net profit.

Market cap of the Navaratna Oil giant is near Rs 30000 Cr. Book value is Rs 655.69. Price/Book ratio is 1.97. P/E stands at 9. It is clearly below the industry P/E of 12. Company reported annual sales of near Rs 8600 Cr in the FY 2011. Subsidy to the oil marketing companies is a big headache for the company. The Diesel Price De Regulation which is going to be implemented, may be a key driver for the company. The stock is now trading in the levels of Rs 1300. It is a smart buying opportunity for long term investors. Long term target is Rs 1700/

Stocks Recommended by San Joseph

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