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Sellside Research

What are they smoking?

When foreign brokerage houses entered India, many investors felt that finally they would get an opportunity to have world class research reports. But the experience has been a painful one.

On June 29, 2011, Nomura Securites came out with a buy call on KS Oils with a target of Rs.45.KS Oils was trading around Rs.22 then.So the price target was a whopping 100% above the then prevailing price.Subsequently, the scandal about KS Oils broke and now it is trading at around Rs. 5 per share !

Now, you have the good people of Macquarie have put an Outperform rating on DLF with a price target of Rs.250. DLF is known for its opaque accounting practices and poor corporate governance issues.Veritas in it’s detailed report has put a price value of Rs.100 on the stock.What is interesting is that Macquarie had slammed HDFC for its accounting practices, but at the same time has given a clean chit to DLF for the same.

Can DLF hit 250 in the short term?Sure, in the Indian stock markets, anything is possible.But is it the kind of stock that one expects a reputed brokerage house to recommend for “investing”?Hell, no !!

Makes one wonder, what are these analysts smoking?

2 replies on “What are they smoking?”

Take a pledge will not listen( read) stock brokers. ye sab beeke hoyee hai ( sold themselves to operator and managements )

What drives anybody to think these “reputed” brokerages have your investment performance in mind when they release these reports? What are “you” or anybody else who reads their reports, smoking?!? (I apologize…no personal offense meant). Even Veritas follows the “standard industry practice” of first releasing their reports to paid customers who can build up their short positions and THEN releases their reports for wider audience.
In a way, it is good that Indiabulls filed a case against Veritas, as it brought this dirty secret out into the open.

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