Stock views on IFCI, GMR INFRASTRUCTURE, MARUTI SUZUKI

JP MORGAN on MARUTI SUZUKI

JP Morgan reiterates the `Neutral' stance on Maruti Suzuki given that while industry growth will likely aid Maruti's volumes, competitive intensity is rising. November sales at 112,554 units were up +28% y-o-y. Sales growth was driven by the domestic segment while exports declined. Domestic segment sales at 102,503 units were driven by healthy retail sales. The Eeco, mass market A2 segment and A3 segment reported strong growth, while the entry-level M800 sales declined -20% y-oy. The volume outlook remains healthy, as the top 10 cities have grown at 35% y-o-y over the past few months, in addition to rural sales doing well. The monthly incentives are lower y-o-y. However, growth rates are likely to moderate with a high base. Further, the management expects margins to remain subdued given that pressures from currency and commodity prices have risen. Maruti's export shipments at 10,051 units declined, given static demand in Europe. The management is raising its focus on non-European countries to partially offset the above.

BANK OF AMERICA on GMR INFRASTRUCTURE

Bank of America maintains the `Underperform' rating on GMR Infrastructure on delay in land monetisation at Delhi and Hyderabad airports and expensive reported valuations. BOA sees a short-term trading opportunity in GMR as its profitable exit from Intergen should support the stock re-rating by 10-15% after a 15% decline in November. GMR has agreed to sell its 50% stake in Intergen for $1.23 billion to Huaneng, China. This could be a stock catalyst given the de-risking of the group financials. Losses of GMR's investment in Intergen stood at $78 million coupled with finance costs of $52 million in CY09. Also, this transaction should deleverage GMR's balance sheet as the proceeds would be used to repay $1 billion of Intergen's M&A debt which puts an end to off-balance sheet guarantees. With T3 getting fully capitalised in Q3FY11 to the tune of 9,300 crore, thereby yielding a loss in Delhi International Airport (DIAL) in H2FY11, the airport regulator is due to come out with a concrete policy on determination of aero charge based on operation, management and development agreement.

HSBC  on IFCI

HSBC initiates coverage on IFCI with a `Buy' rating and a price target of 92. IFCI is one of the pioneer organisations set up by the Government of India in order to cater to the various segments of the capital market. IFCI offers a wide range of products to the target customer segments to satisfy their specific financial needs. IFCI has earned a net interest margin of 1.8% during the first quarter of FY11. IFCI has been accorded infrastructure company status, which allowed it to issue infrastructure bonds worth around 500 crore with a 5-year lock-in period. At present the total investment book of IFCI is around 50,00 crore and it brings the per share value of 61. Additionally, certain non-quoted investments can get listed or may be quoted in some manner, which will increase the visibility of the investment book further. The company may consider separate listing of any of the subsidiaries as well. At current levels, where most of the PSU banks are in the upper band of the historic valuation cycle, IFCI is one of the cheapest stocks available in the financial space.